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National Agricultural Insurance Scheme and its impact on agricultural productivity in selected Indian states

Student name: Ms Tripti Rustagi
Guide: Mr Soumendu Sarkar
Year of completion: 2015
Host Organisation: Indian Institute of Technology, Roorkee
Supervisor (Host Organisation): Dr Subir Sen
Abstract: The agriculture sector of India is the main employment provider with 51% of its population employed in agriculture and allied activities (World Bank, 2013), is affected by natural hazards due to climate changes, and requires protection against uncertainties. Therefore, role of agricultural Insurance is very important as it is a way to cover for financial losses incurred due to reduction in expected outputs from agricultural products. Crop insurance has existed in India since 1970s; NAIS (1999) has been the largest crop insurance scheme in India, insuring 25 million farmers (Clarke et al., 2012). This study aims to establish a relationship between the uptake of National Agricultural Insurance Scheme (NAIS) and productivity (TFP). Using panel data across 18 states of India for 9 years (2001-2009), it seeks to capture the interstate productivity differences which occur due to uptake of agricultural insurance. Apart from insurance uptake certain other variables like expenditure on agricultural research, access to credit, net irrigated area, etc, serve as independent variables for this study. The total factor productivity changes would be calculated by using DEA (Data Envelopment Analysis) through Malmquist productivity indices. This study would enable us to know the factors that cause productivity changes in selected Indian states and in the face of climate change, the relationship between NAIS and productivity will help the major stakeholders of NAIS (farmers, insurance company and government) take a better decision with regard to agriculture insurance. Key Words: Agriculture, Insurance, NAIS, Panel Study, DEA, Malmquist productivity index, TFP.