REDESIGNING CROP INSURANCE FOR COPING WITH CLIMATE CHANGE IN INDIA

India being located in the low latitude region of the globe is extremely vulnerable to climate change due to its tropical climate, monsoon-based rainfall, long coast line, high dependence on agriculture and preponderance of small holders. Manifestations of climate change in India are steady increase in temperature, rise in rainfall variability, water stress, inundation of coastal areas, and increase in frequency and intensity of weather extremes such as drought, flood, cyclone and storm surge. This has enhanced agricultural risk and endangers rural livelihood and food security. Insurance is an ex-ante adaptation measure and a risk transfer mechanism. In the context of climate change, the vulnerable rural community needs more of insurance at lower premium, whereas the insurance company has a tendency to increase premium and limit insurance for its financial viability. This paper analyses the efficacy of major crop insurance schemes implemented in India in addressing the enhanced agricultural risk. The paper concludes that crop insurance product needs to be designed in such a manner that it not only acts as a risk transfer tool but also a potent device to reduce risk and crop loss by inducing desirable proactive and reactive responses in insurance users.