Institute for Financial Management and Research Centre … · Institute for Financial Management and Research Centre for Insurance and Risk Management Summer Internship Report On

1

Institute for Financial Management and Research

Centre for Insurance and Risk Management

Summer Internship Report

On

Acceptability of weather insurance products in Dungarpur district of

Rajasthan

Submitted

By

Mayank Midha

PGDRM, Institute of Rural Management Anand (IRMA)

PRM-28

2

ACKNOWLEDGEMENT

The summer internship at CIRM was a great learning experience for me and I take this

opportunity to thank individuals without whose help and support this study would not have

been possible.

First of all, I would like to thank Prof. Nivedita Kothiyal, and Mr. Alpesh Macwan at IRMA

for coordinating and organizing the traineeship segment.

I would like to acknowledge the support provided by Ms.Rupalee Ruchismita, Executive

Director, CIRM and Prof. C.Vijaylakshmi, at IFMR Trust in instituting this project. I

acknowledge my discussions with Mr. Chetan Bhatia and Mr. Mangesh Patankar, Consultants

at CIRM, and the kind of support extended by them during the study is really commendable.

The study at Dungarpur, Rajasthan could not have been a reality but for the diligent,

reciprocative support of Mr. Vishnu Khedkar at the Confederation of Indian Industries (CII),

Mr.Tarachand Varma at PI industries and the villagers in village Bodigama Bada, Oda,

Pachlasa Bada and Punjpur.

Special thanks are due to my faculty guide, Prof. Preeti Priya who right from the onset of my

working on this project provided me with her guidance and moral support.

Mr. Sarthak Gaurav at IGIDR, Mumbai deserves a special mention for letting me explore and

helping me with all the doubts regarding various aspects related to micro insurance.

Mayank Midha

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Table of Contents

LIST OF ABBREVIATIONS

LIST OF TABLES

LIST OF FIGURES

LIST OF CHARTS

LIST OF BOXES

LIST OF ANNEXURES

EXECUTIVE SUMMARY

1. INTRODUCTION ................................................................................................... 10

1.1 THE MICRO INSURANCE MARKET ............................................................................. 11

1.2 TYPES OF WEATHER RISK MANAGEMENT INSTRUMENTS: .......................................... 12

2. STUDY AREA ........................................................................................................ 17

2.1 DUNGARPUR DISTRICT: ............................................................................................ 17

3. OBJECTIVES ......................................................................................................... 24

4. METHODOLOGY .................................................................................................. 24

4.1 QUALITATIVE PHASE: ............................................................................................... 24

4.2 QUANTITATIVE PHASE: ............................................................................................. 26

5. ANALYSIS & RESULTS: ....................................................................................... 27

5.1 QUALITATIVE PHASE - FINDINGS ............................................................................... 28

5.2 QUANTITATIVE PHASE - FINDINGS ............................................................................ 31

5.3 SELECTION OF POTENTIAL PARTNERS........................................................................ 36

5.4 SUMMARISING ANALYSIS AND RESULTS .................................................................... 40

6. CONCLUSION ....................................................................................................... 41

7. LIMITATIONS ....................................................................................................... 42

8. REFERENCES ........................................................................................................ 44

Annexures.............................................................................................................................44

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Abbreviations Used:

AICL: Agriculture Insurance Company of India Ltd.

APL: Above Poverty Line

BDI: Backward Districts Initiative

BoP: Bottom of Pyramid

BPL: Below Poverty Line

CCEs: Crop Cutting Experiments

CCIS: Comprehensive Crop Insurance Scheme

CII: Confederation of Indian Industries

CIRM: Centre for insurance and Risk Management

FGDs: Focussed Group Discussions

GOs: Government Organisations

GVT: Gramin Vikas Trust

Ha: Hectare

IFMR: Institute for Financial Management and Research

INR/Rs.: Indian Rupee

ITC: Indian Tobacco Company Ltd.

NAIS: National Agriculture Insurance Scheme

NGOs: Non-government Organisations

NREGS: National Rural Employment Guarantee Scheme

PEDO: People’s Education and Development Organisation

PI Industries: Pesticides India Industries

PRAs: Participatory Rural Appraisal

PRIs: Panchayati Raj Institutions

RSVY: Rashtriya Sam Vikas Yojana

SCs: Scheduled Castes

SHGs: Self Help Groups

STs: Scheduled Tribes

UNDP: United Nations Development Program

WRMS: Weather Risk Management Services Pvt. Ltd.

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List of Tables:

Table No. Table name

1 Performance of the area yield based crop insurance in India

2 Advantages and challenges of index-based insurance

3 Dungarpur district at a glance

4 Major Differences between the blocks of Dungarpur district

5 Sampling plan and size of household survey

6 Categories of the institutions

7 Comparison of prospective partners across key parameters

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List of Figures:

Figure No. Figure name

1 Social factors influencing consumer buying behaviour

2 Psychological factors influencing consumer buying behaviour

List of Charts:

Chart No. Chart name

1 Per capita income

2 Average land holding (hectares)

3 Human development index

4 Information/knowledge about farming techniques

5 Information/knowledge about agri-produce marketing

6 Reasons for not taking insurance products

7 Preference for insurance agent/vendor

8 Preference for information channel

List of Boxes:

Box No. Name

1 Features and drawbacks of the government-sponsored area yield

crop insurance scheme in India

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List of Annexures:

Annex No. Annexure Name

1 District Map of Dungarpur

2 Private-Public-Peoples Partnership Convergence Chart -CII

3 CII Dungarpur Initiative: Programme Impact Chart

4 Social and Resource maps

5 Household Survey Questionnaire

6 Income/Expenditure mapping

7 Details of FGDs

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EXECUTIVE SUMMARY

I. Objective: The objective of the study is to conduct a need analysis for a weather insurance

product in the Dungarpur District of Rajasthan. This includes a Client Profiling Study,

identifying various factors that influence or hinder the adoption of the product and to

recommend a potential partner for distribution of this product.

II. Scope of the Study: The scope of the study is limited to the selected representative villages

in the Aspur Block of the district.

III. Methodology: The methodology used for the study includes both Qualitative and

Quantitative techniques. During the qualitative phase various Participatory Rural Appraisal

(PRA) exercises and Focussed Group Discussions (FGD) with the villagers were conducted

to generate socio-economic, psychographic and demographic primary data. The data

collected through these exercises was validated through In-Depth Unstructured Interviews

with the villagers. Findings of the qualitative phase were substantiated through a structured

quantitative Survey through a Survey questionnaire. Furthermore descriptive analysis of the

quantitative data was undertaken.

IV. Sources of Data: The sources of primary data were different PRA exercises, informal

unstructured interviews, Focussed Group Discussions and a Client Survey through a

Structured Questionnaire. The Secondary Data Sources were Annual Reports of various

insurance organisations, journals and working papers on insurance products.

V. Observations and Conclusions: The range of risks that affect the income of agricultural

producers and agribusinesses is quite broad. The two predominant risks being price risk and

production risk, and weather, in particular, is one of the most persistent production risks

which impact all aspects of the agricultural supply chain, particularly in economies based

on rain-fed agriculture and is mostly responsible for the variations in the income of the

farmers. There are only a few insurance mechanisms which deal efficiently with weather

risk. The traditional Area-Yield Indexed Crop insurance (NAIS) in India, an initiative of the

government has been in existence for the past two decades and has been continuously

criticised on a number of aspects ranging from economic, administrative and financial.

Whereas the relatively new Index based weather insurance products are less susceptible to

some of the problems intrinsic in traditional multi-peril crop insurance and hence have

higher probability of getting accepted by the farmer communities. The demand for these

insurance products by farmers in the context of rain-fed village economy is dependent on a

range of different factors ranging from cultural, social, psychological and personal factors.

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The frequency and the intensity of the shocks faced by the farmers determine the need for

the product. On the other hand affordability, previous experience and the knowledge about

the product also influence demand. Product features like: risk coverage, premium,

distribution of the product and even the choice of the vendor play a considerable role in

affecting the demand for the product. The study also reveals that lack of knowledge about

insurance products is the most common reason for not buying insurance products and

surprisingly the respondents felt that affordability doesn’t act as a major hurdle in buying

the product. As per the study the need for weather insurance is considerably high but this is

subject to certain specific product features offered by the insurer.

VI. Recommendations: The Index based weather insurance could be launched in the Aspur

block for the pilot phase covering both excess as well as deficit rainfall for the Kharif

season. CIRM, in particular, should look at the possibility of having a revenue generating

model by designing the training modules for the villagers through which awareness level

about the insurance products can be increased. People’s Education and developent

Organisation (PEDO) and SPECK systems could be used as potential delivery channels.

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1. INTRODUCTION

There is a range of risks that affect the income of agricultural producers and agribusinesses.

The two predominant risks are: price risk, which is the reflection of variations in market

prices for agricultural commodities and agriculture inputs; and production risk, which

encompasses variations in the volume or quality of the commodity produced. Weather, in

particular, is one of the most persistent production risks which impacts all aspects of the

agricultural supply chain, particularly in economies dependent on rain-fed agriculture and is

mostly responsible for the variations in the income of the farmers. Even with the introduction

of new crop varieties, production technology such as irrigation and new management

practices which can be utilised to increase yields and improve resistance to weather perils, the

majority of agriculture in developing countries is highly susceptible to extreme,

uncontrollable weather events that can severely impact both quality and yield of a crop. Such

events include excessive or insufficient rainfall and extreme temperatures.

The effects of weather risk are felt most acutely at the household level, particularly by poor,

vulnerable agricultural households. A large majority of them are subsistence farmers.

Traditionally, farmers have managed this risk by adopting certain ex-ante (before the event)

strategies such as using less risky technologies of lower but reliably yielding drought-

resistant crops, by seeking diversification both in terms of production activities on farm and

income generating activities and by devising informal and formal risk sharing arrangements.

These mechanisms may work well for low-magnitude losses, even if they are frequent, they

often prove to be inadequate for risks which are infrequent but severe (like drought, floods

etc.). Weather risks such as ‘drought’ typically affect entire regions at once, which in a way

renders all informal risk sharing arrangements like inter-household transfers, local credit and

asset markets insufficient. Affected farmers are often forced to employ short term coping

strategies i.e. ex-post strategies (after the event) such as migration, borrowing from money

lenders or neighbours, selling assets, or cutting already small expenditures on household

goods and services. Moreover, during such distress periods the cash inflow from the other

alternative sources also falls below the average levels, for example most of the small and

marginal farmers of the affected area would migrate to the neighbouring areas to work as

daily wage labourers, which further results in an abundant supply of labour to these areas and

hence wages offered to the labourers is below the normal levels.

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There can be many instances where farmers could benefit from investing in agricultural

activities that require higher initial investments and hence would generate higher income, ‘if’

the risks affecting these investments such as weather could be managed. Various other

entities which are an essential part of the agricultural supply chain, such as banks or other

intermediaries (middlemen, traders etc) that work with agricultural producers carry the same

risks as their agricultural clients. Hence, they are also hesitant to invest in agriculture due to

potential defaults during or after such an event. Therefore, there is a need for various efficient

risk management instruments that would transfer the risk to insurance markets allowing

growers and agribusinesses to protect themselves against risk, to have a greater ability to plan

for the season, and to access credit [Michael Roth, Swiss Re]. UNDP’s human development

report also suggests that moving towards poverty reduction requires not just the generation of

growing and sustainable income streams among the poor, but also protecting these incomes

through effective risk management - a complementary, twin-track approach. It can therefore

be inferred that the resilience of the farmers and other entities in agribusiness to the weather

shocks can be strengthened if these risks can be managed efficiently through innovative risk

management mechanisms along with other investments in the sector.

1.1 The Micro Insurance Market

Taking inferences from Dr.C.K.Prahlad’s work “The fortune at the bottom of the pyramid”, it

is known that the micro insurance market per se’ operates at the bottom of the pyramid (BoP)

on the “high volumes – low margins” principle. If the “twelve principles of innovation for

BoP markets” [C.K.Prahlad, 2005] are applied to micro insurance, then following points are

essential for the micro insurance products:

1. A good quality product has to be delivered to the target customers at lower price i.e. low

premium amount.

2. Advanced technologies like smart cards, biometric cards and kiosks can be combined

with the existing infrastructure.

3. Some other benefits like in-kind benefits or other incentives can be provided with the

product.

4. The product should be delivered till the very last mile in the villages so that the poor do

not have to incur any transaction costs for accessing the product like transportation and

opportunity cost of lost wage.

5. Developing simple and easy-to-understand products and reducing the labour cost

involved by simplifying the operations.

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6. Creating consumers through education and raising awareness through innovative

mechanisms.

7. Collaborate with other organisations already present in the market and transacting with

the rural poor and leverage on their existing infrastructure for combating the greatest

challenge in the BoP markets i.e. distribution of products. This strategy not only helps in

distribution but also in cutting down the transaction costs.

1.2 Types of Weather Risk Management Instruments:

There are only a few insurance mechanisms which deal efficiently with weather risk.

Traditional, multi-peril crop insurance, often excludes systemic weather factors such as

drought. When weather is included, these traditional programs determine payouts through

loss assessments performed through costly and time consuming individual farm visits that

evaluate the damage of a weather event on a farmer’s field. In developing countries, like

India the costs associated with these types of assessments are higher, due to small farm sizes

and poor transport infrastructure.

Area Yield Crop Insurance:

The traditional area-yield based crop insurance in India was the initiative of the government

and has been into existence for the past two decades. This scheme was first launched as

Comprehensive Crop Insurance Scheme (CCIS) during 1985-1986 and was then launched as

the new and improved National Agriculture Insurance Scheme (NAIS) in the year 1999-2000.

It intends to encourage the farmers to adopt progressive farming techniques, high value and

high quality inputs along with the new and improved technology. The product attempts to

cover the whole spectrum of risks that are related to crops be it weather (Deficit or excess

rainfall, temperature, strong winds etc.), pest attacks or other environmental risks. NAIS is

delivered through rural public sector banks wherein it is tied up with the micro loans, but it is

available for both i.e. the loanee as well as the non-loanee farmers, irrespective of the size of

their land holdings. There have been a number of cases where the farmers are totally unaware

of the fact that they are insured, even if the farmers are aware they do not have the knowledge

about the various technical details of the product. This product is offered across the country

(19 states and 2 UTs) on the same premium rate whereas there is huge variation in the

amount and type of risks faced by the farmers in different parts of the country. This leads to

the problem of cross subsidisation. The claim process comprises of crop-cutting experiments

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(CCEs)1 which in particular, is a very lengthy procedure. This scheme has been criticized on

a number of aspects ranging from administrative to financial (Box 1 features the various

features and drawbacks of the scheme). The figures given in table 1 tend to reveal the

disastrous performance of the scheme which is coupled with its limited expansion in the

scope and content of crop insurance.

Table1: Performance of the area yield based crop insurance in India

S.No: Specifications (for a period of 1985-86 through

1999)

Value

1. Total premiums collected INR 4020 million

2. Total claims paid INR 23,050 million

3. Sum Insured INR 249.2 billion

4. Average per annum claims paid INR 2330 million

5. Loss Ratio (excluding the management expenses) 5.72

1 Crop Cutting Experiments: Each state/UT Government plans and conducts the requisite number of C.C.E's for all notified

crops in the notified insurance units in order to assess the crop yield. It maintains single series of C.C.E's and resultant yield estimates, both for Crop Production estimates and Crop Insurance. These C.C.Es are undertaken per unit area/per crop on the

following scale:

UNIT AREA MINIMUM NUMBER OF C.C.Es REQUIRED

Taluka / Tehsil / Block 16

Mandal / Phirka /any other smaller unit area comprising 8-10 villages

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Gram Panchayat comprising 4-5 Villages

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If the 'Actual Yield' (AY) per hectare of the insured crop for the defined area (on the basis of required number of Crop Cutting Experiments (CCEs)) in the insured season, falls short of the specified Threshold Yield (TY), then all the insured

farmers growing that crop in the defined area are deemed to have suffered shortfall in their yield. This scheme provides coverage against such contingency. 'Indemnity' is calculated as per the following formula:

(Shortfall in Yield/Threshold yield) * Sum insured for the farmer where, { Shortfall = Threshold Yield - 'Actual yield ' for the defined Area}

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BOX 1: Features and drawbacks of the government-sponsored area yield crop insurance

scheme in India2

Index based agriculture/weather insurance3:

Weather indexed risk management products represent a newly developed alternative to the

traditional crop insurance programs for small and marginal farmers in the emerging markets.

Index-based weather insurance products are contingent claims contracts for which payouts

are determined by an objective weather parameter (such as rainfall, temperature, or soil

moisture) that is highly correlated with farm-level yields or revenue outcomes. Rainfall-

indexed insurance is a good innovative solution for regions where widespread crop losses are

caused by drought or excess rainfall. In such regions, rainfall can be used as a good proxy for

the actual losses incurred by farmers. The underlying index used for an index insurance

product must be correlated with yield or revenue outcomes for farms across a large

2 Source: A Review of Past Crop insurance Experience in India by BASIX Insurance Unit.

3 Source: World Bank, Agriculture and Rural Development

1. The product attempts to cover a whole range of risks related to crops, making it prone to

the widespread problem of moral hazard

2. The product is tied to the crop loans given by the rural public sector banking system.

3. The extent of sum insured is linked to the loan size. Because terms of the insurance

policy are sometimes not communicated properly, many borrowing farmers are unaware

that they are insured.

4. Claims are assessed by crop-cutting experiments which entail a huge expenditure,

making the administration of the product costly.

5. The claim settlement process takes a long time (from six months to two years).

6. The financial performance has been unviable, with the claims-to premium ratio as of the

2002 kharif season (June–September) at about 4.17 to 1.

7. The premium rate is uniform for a crop across the whole country, while the risk certainly

is not uniform nationwide.

8. The program’s benefit is not distributed equitably: 58 percent of the claim benefit has

gone to a state (Gujarat) whose contribution to the premium has been 16 percent.

9. The premium is subsidized. Actuarial rates are not charged.

Source: Manuamorn (2007)

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geographic area. In addition, the index must satisfy a number of additional properties that

affect the degree of confidence or trust that market participants have that the index is

believable, reliable, and void of human manipulation, implying that the measurement risk for

the index is low. The desirable feature of the index include: (i) the index construction is

transparent to policyholders, and the realization of the index verifiable to them, (ii) the

calculation of the index is free of tampering or manipulation, (iii) the distribution of the

realization of the index can be accurately estimated, so that the product can be appropriately

priced, and the expected return estimated by potential policyholders (iv) the index can be

measured at low cost, and calculated in a timely manner, and (v) the realization of the index,

or a transformation of the index, is highly correlated with household income and consumption

(vi) the index is stable and sustainable over a period of time with good historical data.

Publicly available measures of weather variables generally satisfy these properties. Index-

based insurance is less susceptible to some of the problems intrinsic in traditional multi-peril

crop insurance. Because of the fact that payouts for indexed contracts are automatically

triggered once the weather parameter reaches a pre-specified level, the insured farmers

receive timely payouts. The automatic trigger reduces administrative costs for the insurer by

eliminating the need for tedious field-level damage assessment (which exists in case of

traditional crop insurance). These features of the indexed products help in cutting down the

administrative costs, which further results in lower premiums and an affordable product for

the farmer. However, it should be kept in mind that the index-based alternatives provide

partial cover by protecting against specific perils like deficit rainfall and are therefore a part

of a complete risk management package4. The objective and exogenous nature of the weather

index prevents “adverse selection5” and “moral hazards”6 (Table 2 indicates various

advantages and challenges for index-based insurance). Indexed products also facilitate risk

transfer to the international markets, because international reinsurers are likely to provide

4 The risk management strategy comprises of formal and informal mechanisms of prevention, reduction, mitigation, coping,

and adaptation. They can be classified as ex-ante (before the event) and ex-post (after the event) and the instruments can be

market based solutions or provided by the state (public sponsored). Insurance is a predominant ex-ante formal mechanism to

manage “production risks”.

5 Adverse selection - farmers know more about their risks than the insurer, leading the low-risk farmers to opt out and

leaving the insurer with only bad risks.

6 Moral hazard - farmers’ behaviours can influence the extent of damage that qualifies for insurance payouts i.e. farmers will

always know more than the insurer about their actual yields and farm practices, they could influence farm data and output, or

only avail of the products when a claim is more likely.

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better terms when the insurance is based on measurable weather events instead of farm-level

losses.

Table 2: Advantages and Challenges of Index-Based Insurance [World Bank 2005]

Advantages Challenges

Reduced moral hazard

The indemnity does not depend on the

individual producer’s realised yield.

Basis risk7

Without sufficient correlation between the

index and actual losses, index-based

insurance is not an effective risk management

tool. This is mitigated by providing self-

insurance of smaller basis risk by the farmer;

offering supplemental products underwritten

by private insurers; blending index insurance

and rural finance; and offering coverage only

for extreme events.

Reduced adverse selection

The indemnity is based on widely available

information, so there are few informational

asymmetries to be exploited.

Precise actuarial modelling

Insurers must understand the statistical

properties of the underlying index.

Standardized and transparent structure

Insurer could apply uniform structure of

contracts.

Education

Lots of information is required by users to

assess whether index-based insurance will

provide effective risk management.

Availability and negotiability

Standardized and transparent, index-based

insurance can be traded in secondary

Market size

The market is still in its infancy in

developing countries and has some start-up

7 Basis risk is the risk of choosing a wrong base for settlement of the claim. In weather insurance, there can be two sources

of basis risks:

i) Basis risk of Weather Station – Most weather insurance policies provide for payment of claim based on the rainfall or temperature recorded at the IMD’s observatory in the district. Weather, especially the rainfall in India varies spatially as well as temporally within a small distance. Weather at the IMD’s observatory is thus

a poor proxy for the weather at the village where the insurance is given.

ii) Basis risk of cover design – Many weather insurance products are designed to provide compensation for the

adverse weather conditions irrespective of the crop sown. Also, some other weather insurance designs cover

only rainfall or deficit in rainfall. Insurance structures like these would invariably result in many occasions where farmer is getting the claim without any crop loss or not getting a claim in spite of crop losses on

account of weather conditions.

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markets. costs.

Reinsurance function

Index insurance can be used to more easily

transfer the risk of widespread correlated

agricultural production losses.

Weather cycles

Actuarial soundness of the premium could be

undermined by weather cycles that change

the probability of the insured events

Versatility

Index products can be easily bundled with

other financial services, facilitating basis risk

management.

Microclimates

Rainfall or area-yield index-based contracts

are difficult to be used for more frequent and

localized events due to microclimates.

Forecasts

Asymmetric information about the likelihood

of an event in the near future will create the

potential for inter-temporal adverse selection.

2. STUDY AREA

2.1 Dungarpur District:

As specified by the planning commission’s report on Backward Districts Initiative (BDI)

under the Rashtriya Sam Vikas Yojana (RSVY)8, the identification of various backward

districts in different states of India has been made on the basis of an index of backwardness

comprising of three parameters with equal weights assigned to each: (i) value of output per

agricultural worker; (ii) agriculture wage rate; and (iii) percentage of SC/ST population of the

districts. Three districts out of a total of thirty two in Rajasthan feature in this list of RSVY

namely, Banswara, Dungarpur and Jhalawar.

The data provided by the Directorate of Economics and Statistics, Government of Rajasthan,

reveals that Dungarpur when compared with other districts of Rajasthan features as a district

with lowest levels of per capita income, average land holding, human development index

[Chart 1, 2, 3] and simultaneously has a high percentage of population as scheduled tribes.

8 The Backward Districts Initiative under the Rashtriya Sam Vikas Yojana was initiated with the main objective of putting

in place various programmes and policies with the joint efforts of the centre and the state governments to remove barriers to growth, accelerate the development process and improve the quality of life of the people. The scheme aims at focused

development programmes for backward areas which would help reduce imbalances and speed up development. The scheme

covers 100 districts where the number of districts per state has been worked out on the basis of incidence of poverty. In addition 32 districts affected by left wing extremism are also covered.

18

Though other basic infrastructural facilities are available as per the records but as far as the

accessibility and the quality of these facilities (hospitals, schools, markets etc.) is concerned

there is a lot that needs to be improved. Table 3, provides some more statistics about

Dungarpur.

Chart 1: Per Capita Income

Chart 2: Average Land Holding (Hectares)

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Chart 3: Human Development Index

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Table 3: Dungarpur district at a glance

S.No: Item Year Unit India Rajasthan

1 Gross Domestic product

At constant prices + 2007-08000

Crores Rs.3114.45(

A) 118.34(A)

2 Per Capita income at

Constant prices + 2007-08 Rs.24256

(A)16260 (A)

3 Life Expectancy At birth

(i) Male 2001-06 Years 63.9 62.2

(ii) Female 2001-06 Years 66.9 62.8

4

Vital rates based on

SRS(Estimate)

(I) Birth rate 2006 Per' 000 23.5 28.3

(ii) Death rate 2006 Per' 000 7.5 6.9

(iii) Infant mortality rate 2006 Per' 000 57 67

5 Geographical Area 2001 Lakh Sq.Km. 32.87 3.42

6 Population 2001 In Lakhs 10286.1 565.07

7 Population Density 2001 Per Sq.Km. 325 165

8

% of urban Pop. to total

Population 2001 Percent 27.8 23.4

9

% of S.C. Pop. to total

Population 2001 Percent 16.2 17.2

10

% of S.T. Pop. to total

Population 2001 Percent 8.2 12.6

11 Literacy 2001 Percent 64.8 60.4

12 No.of Bank OfficesSept.,

2007

Per Lakh of

pop. 6.3 5.6

13 Per Capita bank DepositSept.,200

7Rs. 25018 10047

14 Per Capita bank CreditSept.,200

7Rs. 17891 8170

Source: Directorate of Economics and Statistics, Govt. of Rajasthan

Dungarpur [annexure 1] as a district can be characterized by tribal habitation practising

subsistence rain fed farming on hilly and undulated terrains. This district has been divided

into five blocks i.e. Aspur, Beechiwara, Dungarpur, Saagwara and Seemalwara, of which

Aspur and Saagwara can be significantly differentiated from other three blocks in a number

of aspects ranging from socio-economic, cultural to demographic. As is evident from the

table 4, the habitation pattern in Aspur and Saagwara is totally different from the other three

blocks as majority of the villages have a mixed population comprising of communities like

A: Advance Estimates, Q: Quick Estimates

+: Base Year 1999-2000 SRS: Sample Registration System

Pop: Population

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Patidars, Tribals (Meenas), Rajputs, Jains, Brahmins, Sewaks etc. whereas most of the

villages in other blocks are completely tribal. Moreover, due to relatively plain areas in Aspur

and Saagwara, the farmers have large landholdings with most of the villages having the

advantage of canal irrigation facilities and comparatively villages in other blocks have small

and scattered land holdings because of the hilly terrain and most of the farming is rain fed.

Hence, there exists a need for innovative risk mitigating instruments alongwith sustainable

sources of income so that the quality of life and livelihoods of the residents of Dugarpur is

improved.

Table 4: Major differences between the blocks of Dungarpur district

PARAMETER ASPUR & SAAGWARA OTHER BLOCKS

COMMUNITIES Patidars, Tribals (Meena), Rajputs,

Sewaks, Jains and Others

Mostly Tribal (Meena/Bheels)

IRRIGATION Mostly canal irrigated, some of the

villages are also affected due to

water seepage in the fields through

these canals. Irrigation through

canals has benefited many villages

of the area.

Mostly rain fed.

LAND TYPE Relatively plain land with saline

soil.

Undulated hilly terrain with

acidic soil.

LAND

HOLDINGS

Relatively large land holdings.

Small and scattered

landholdings.

Source: CII

2.1.1 CII - Dungarpur Initiative

The CII - Dungarpur initiative aims at the development of the backward districts of India

through Public-Private-Community-Partnership (PPCP) by proactive business interventions.

The conceptual framework of this initiative evolved through a multi-stakeholder dialog under

the CII-UNDP India partnership forum. Annexure 2 and 3 shows that CII has managed to

rope in a lot of public and private players for the proposed development of the district.

Activities ranging from demonstration trials for different crops, quality agri-input supply,

formation of water user groups for efficient utilization of water, agri-produce marketing and

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IT education along with weather advisories are undertaken by various CII partners in

different areas of the district.

CIRM has been one of the partners in this initiative and it has identified that it is really

necessary to have some risk management infrastructure in place for the intended development

of the area. Consequently it intends to device an Index based weather insurance product for

the farming community in the district which would take care of their possible losses in the

farms. Further it wishes to study the larger issues associated in rolling out weather insurance

products for such farmers like high premium rates, basis risk, low-scale, and last but not the

least the unavailability of quality infrastructure for weather monitoring and data collection.

To delve upon all these issues it has collaborated with Weather Risk Management Services

Pvt. Ltd (WRMS) and Ingen Technologies which would take care of the weather related

technical aspects of designing such insurance.

The risk management initiative would be carried out in phase wise manner, first phase being

a pilot phase. During this, CIRM has planned to install two weather stations in the Aspur

block of Dungarpur district. These weather stations would help in generating all the relevant

data of the areas for which the weather insurance product will be launched. The next phase

would be an iteration of the first phase in a larger context whereby around 18 more stations

would be launched to cover the whole district.

2.1.2 Village Profile:

This study covers a total of four villages in Aspur block of the Dungarpur district namely,

Bodigama Bada, Oda, Pachlasa Bada and Punjpur [annexure 1]. CIRM along with its partners

intends to develop the product which suits the needs of the villagers across the five blocks of

Dungarpur and Aspur had been selected as the study area on the basis of the presence of CII

facilitators. Furthermore, the selection of the villages was done by considering the major

differences that exist in the villages across different blocks of the district. Hence, it was

imperative to assess the probable socio-economic, agricultural and demographic

characteristics of the villages in other blocks in contrast with that of the villages in Aspur and

in a way select a representative sample. As mentioned in Table 4, the villages of other blocks

are differentiated mainly by the tribal population and rain-fed farming, so villages Oda and

Pachlasa Bada were selected to conduct the study as they matched the criteria to some extent.

Villages Bodigama Bada and Punjpur could typically represent many villages of Aspur and

23

Saagwara block, as these villages are inhabited by a number of communities, have proper

irrigation facilities etc. The major differences across the sample villages and the sampling

plan are shown in annexure 7 and table 5 respectively.

2.1.3 Community Profile:

• Tribal community: Dungarpur is often described as a backward tribal district; the tribal

population forms a major chunk of the total population in the district i.e. approximately

65% (census 2001 data). The tribal population, as understood from the people residing in

the villages covered under the scope of the study, when compared with other communities

are economically and socially a backward community and want to stay with their beliefs,

customs, age old practices and myths. The literacy level is relatively low in comparison

with other communities residing in the same areas. Most of the tribal farmers practice

subsistence farming and are not very convenient in adopting new farming techniques,

whereas the young generation is very enthusiastic in adopting new methods to improve

the yields. The role of women in decision making is considerable. In most of the

decisions related to household activities like marriages and sale/purchase of assets women

in the household are consulted.

• Patidars and Rajputs: The Patidars and Rajputs are the “higher castes” and are

economically better off, compared to the tribal population. People are very

entrepreneurial in nature and like to take risks when it comes to either venturing out by

opening new small businesses in nearby cities like Ahmedabad or Mumbai or opting for

sending their family members for taking up jobs in cities. Farmers of these communities

in contrast to the tribal farmers like to try new and latest farming techniques to improve

the yields and are also interested in trying new crops. The role of women in decision

making is very limited. These people have a high sense of belongingness to their

communities, as they try to maintain the status of their household at higher levels within

their community. Many farmers have the perspective that even if a household is going

through a tough time they would not like to disclose that in the community for taking

help. People would always get together for community meetings and donate for various

religious and community programs, depending on their financial condition.

24

3. OBJECTIVES

1. To conduct need analysis of farmers for the weather insurance product.

2. To develop a consumer profile of the potential users and non-users of the product by

capturing socio-economic, demographic and psychographic aspects.

3. To identify factors affecting the acceptability of the product.

4. To analyse the potential of the probable partner organisations and recommend a

suitable partner for selling the weather insurance product in the district.

4. METHODOLOGY

The methodology adopted for this study included both qualitative as well as quantitative

techniques. To capture the relevant socio-economic and demographic aspects of the villagers

for the study, a combination of various tools such as unstructured in-depth interviews, PRA

tools and focussed group discussions were used. The primary data generated through these

exercises helped in developing the questionnaire for the household survey, wherein these

qualitative findings were substantiated through a descriptive analysis.

The fieldwork in Dungarpur began in the last week of June, 2008. In the beginning brief

meetings with various community leaders of the villages helped building up the rapport

required for conducting the data generating exercises in the villages.

4.1 Qualitative Phase:

Tools used for primary data collection:

i. Unstructured & Semi-structured Interviews: During the first few days of my stay in

Dungarpur, I spent a lot of time with the villagers so as to get a clear understanding of

their culture, beliefs and attitudes. These interviews with the potential users/non-users

helped in generating a lot of information relevant to the study and in understanding

the realities at the village level.

ii. PRA Tools:

a. Social and Resource Mapping: This exercise was conducted to get a fair idea

about the communities in the village and their resource base. The social and

resource map drawn by the villagers included the various social structures,

25

institutions, location of religious or different ethnic groups residing in the

village and the presence of resources like agriculture land, water, fuel wood

etc. The purpose behind conducting the exercise was to learn about the

perception of the villagers regarding social structures in the village, the

differences among the households by ethnicity, religion, wealth, and the

access and availability of various resources. This exercise was also utilized to

locate educated households, female headed households amongst the different

hamlets or communities. [annexure 4]

b. Seasonal Matrix: This exercise was conducted to learn about changes in

livelihoods over the year and to show the seasonality of agricultural and non

agricultural workload, food availability, human diseases, gender-specific

income and expenditure etc.

c. Income and Expenditure Matrices: This tool helped in identifying and

quantifying the relative importance of different sources of income and

expenditures and to measure the vulnerability of households. [annexure 6]

d. Venn Diagrams (Institutional): This tool was specifically used to figure out

some of the important institutions and individuals that as per the perception of

the villagers are accessible and work closely with the villagers on various

issues.

e. Venn Diagrams (Village relationships): This tool was used for measuring the

various factors that affect the relationship of a particular village in terms of

level of cooperation with its surrounding villages. The specific purpose of

conducting this exercise was to figure out the impact of village relationships

on the demand for weather insurance product in the presence of Basis risk.

iii. Focused Group Discussions: The discussions were conducted with the motive of

generating more relevant information and also to triangulate the information

generated through the PRA exercises. These discussions were conducted in all the

four villages with the number of participants varying from twelve to twenty in all,

wherein the participation was dependent on different variables like the social setting,

venue for the discussion etc. The discussions helped in generating the information

primarily about the general issues, problems or shocks faced by the villagers, the role

26

or intervention of various agencies and individuals, awareness about insurance

products, factors which hinder or facilitate the adoption of the insurance products etc.

[annexure 7].

4.2 Quantitative Phase:

i. Questionnaire: Field visits to the sample villages, the results of previous PRA

exercises, exploratory interviews with the community, interaction with the active

members of the various village institutions, focussed group discussions helped in

designing final questionnaire for the household survey [Annexure 5]. The

questionnaire was designed on a questionnaire template provided by the Centre for

Insurance and Risk Management. The final questionnaire aimed at covering the

following issues:

a. The socio-economic, demographic and agriculture related aspects of the

villagers (Section I);

b. Along with their awareness about various insurance products, their response

towards the actual product concept was also recorded (Section II);

c. The details of the shocks faced by the villagers and hence the kind of

strategies adopted by them to cope up with the impact of these shocks (Section

III).

ii. Sampling Methodology: A Random Stratified Sampling method was used to take the

sample size for the household survey. Based on the number of households of each

community residing in the villages the sample size was determined. Table 5, indicates

the total number of households (350) across the four sample villages, the numbers

within the parenthesis indicates the sample size of households of that community. As

described earlier, village Oda and Pachlasa Bada were chosen as these villages had

the characteristics of the villages in the other blocks of Dungapur, so the sample size

of households from the tribal community in Pachlasa Bada was deliberately taken

disproportionately. Whereas for village Oda, which has a hundred percent tribal

population the sample size was taken on the basis of status of the family being BPL or

APL. This was done due to the fact that more than fifty percent of the households fall

in the category of below poverty line (BPL).

27

Table 5: Sampling Plan and Size for Household Survey

Village

Community

Bodigama

Bada

Oda* Pachlasa

Bada

Punjpur

Sample** U S U S U S U S

Tribals 52 10 304 75 196 60 62 10

Patidars 126 40 0 0 100 20 157 45

Rajputs 0 0 0 0 202 40 0 0

Others 103 25 0 0 59 5 96 20

Total 281 75 304 75 557 125 315 75

*Detailed sample size for village Oda: BPL: 40, APL: 35

**U: Universe of the sample; S: Actual Sample

5. ANALYSIS & RESULTS:

Conceptually, the demand for the formal insurance products depends on the individual

farmer’s willingness to pay for the insurance premium and the correlation between the actual

payouts and economic losses at the time of adverse weather conditions [World Bank]. In case

of a new product launch in the unknown territories or regions the credibility of the institution

or the vendor selling that product, in accordance with the conceptual understanding of the

product by the target consumer is supposed to be of significant importance. It is also evident

from the case of a pilot product launch by BASIX9 in some villages of Mahboobnagar district

of Andhra Pradesh that most of the farmers who did not opt for the product were not able to

understand the features of the product. Hence, it can be said that prior to the launch of a new

product in a new and unexplored BoP market, the marketeer of the product has to factor in a

number of crucial factors which reinforce each other either in a direct or an indirect manner

in influencing the decision of rural people.

9 In 2003, BASIX formed a partnership with ICICI Lombard General Insurance Company to pilot the sale of rainfall index

insurance contracts to small farmers in the Andhra Pradesh State of India. The project received technical assistance from the

Commodity Risk Management Group (CRMG) of the World Bank and was the first weather insurance initiative launched in

India and the first farmer-level weather-indexed insurance offered in the developing world. In only three years, the small

pilot program with 230 participants graduated into a large weather insurance operation. During the 2005 monsoon season,

BASIX sold 7,685 policies to 6,703 customers in 36 locations in 6 states. This successful experience sparked much broader

interest in weather-indexed insurance in India.

28

The qualitative phase of the project was undertaken to understand the existing ground

realities related to the livelihoods, agricultural practices, perceptions and other psychographic

aspects of the farmers residing in the study area. The participatory approach followed for the

data collection of the qualitative phase really proved to be beneficial in providing various

insights into the lives of the farmers which further was utilised in designing the tools for the

quantitative phase.

5.1 Qualitative Phase - Findings

•••• Product awareness impacts demand

During the various exercises conducted under the qualitative phase, it was observed that the

demand for the formal insurance products depends largely on the awareness about these

products. Awareness is influenced by the eagerness of communities to collect and gather

knowledge about the new schemes and products launched in the villages for their benefits,

followed by the literacy in communities and also the network of the village with the nearby

markets and towns. It became evident due to the fact that many of the farmers belonging to

the communities such as Patidars, Rajputs or Jains were very well aware of the various

insurance products , whereas the awareness levels about these products appeared to be very

low amongst the tribal farmers of the same village who were also participating in the same

exercises.

Social and cultural factors might influence the awareness levels of the farmers, but

educational qualification proved to be another deciding factor when it was analysed that

many of the tribal farmers of village Oda (where the literacy rate is higher as compared to the

other tribal villages of the area) had bought atleast one insurance product in the past few

years. Farmers were well aware of the concept of life and health insurance and some of the

farmers had bought life insurance products for each member of the household. Furthermore,

the connectivity, approachability of the village with other nearby towns, markets, highways

were also found to be one of the factors influencing the awareness levels of the farmers.

Easily accessible villages like Punjpur, which lie on the state highway, are well connected

with towns such as Aspur, Dungarpur, which enables easy information flow from the nearby

towns. A local market has developed in village Bodigama Bada over a period of time which

serves as the sole market for the surrounding 10-12 villages of that area, all the activities,

29

trade from different parts of the block helps the village with a lot of information flow and

sharing.

•••• Accessibility of the vendors is important to farmers

Farmers also revealed that the accessibility of the vendor or the agent selling the insurance

product is very important to them. As per the farmers, the dissemination of information by

the representatives of the organisation regarding the technical knowledge about the product,

weather advisories, and other relevant information about the payouts, claims processing and

product features are important due to the fact that if the information availability is nearer to

the village then building trust between both sides is easier. A number of farmers also believed

that a faithful relationship can be developed with the company or their representatives if a

repeated number of pro farmer transactions are carried out over a period of time.

•••• Risk management strategies determine the need for the product

It was also realised that the array of current risk management strategies which are adopted by

the households might be a deciding factor in adopting the weather insurance product. During

the discussions, a few of the farmers were of the view that there is no need to increase the

household expenditure by buying the weather insurance product as most of the times they

were able to manage the impact of the shock by adopting certain kinds of informal

mechanisms. These mechanisms included migration during lean periods, having an

alternative source of income, maintaining buffer stocks, cutting down on expenditure or food

intake by the family members, sharing the food with their livestock, accessing credit through

various channels and many more. These strategies could either be classified as ex-ante or ex-

post strategies.

•••• The Consumer Behaviour

Analysing the factors that influence the adoption of the weather insurance product through a

marketing perspective also helped in getting various insights about the potential consumer’s

buying behaviour. As described earlier that cultural factors certainly have an impact on

demand for the product, wherein the culture particular to a particular community, the shared

values, perceptions and behaviours of the people of a particular community direct the buying

behaviour of the potential customers i.e. farmers. Moreover, one of the findings of the

focussed group discussions was the influence of various social factors on the demand. A very

30

less number of farmers of the Patidar and Rajput community revealed that one’s status and

role in the society and more so within the community is also one of the determining factors to

buy the weather insurance product. In a typical Indian village all the households of a

particular community are located in each other’s vicinity, where every household has the

knowledge about other households and therefore as per the villagers, maintaining the status or

trying to match up with the other households in terms of lifestyle, associations, groups etc

becomes very important. For example, if some of the farmers of a particular community opt

to buy the insurance product, then it becomes imperative in one way or other for the fellow

farmers of the community to follow suit.

Figure 1: Social factors influencing consumer buying behaviour

Some of the farmers in villages like Bodigama Bada and Punjpur, who have had the

exposure to the weather insurance product of AICL and who can be termed as “risk-takers”

prefer buying the insurance from a gambling perspective or would buy the product if the

results of the previous season are positive i.e. if payouts are made by the insurer for the

previous season (psychological factors). This category of the farmers also include farmers

who don’t have a proper understanding of the product, they buy the product to bet on a

rainfall level and if the realised level of rainfall is below the specified level, they receive the

payout. Furthermore, it was realised that there is a considerable increase in the number of

farmers buying the product if the results for the previous season are positive and payouts are

declared for that region and the same is true for vice-versa. That is to say, if the results for a

particular season are not positive and there are no payouts then the number of farmers opting

to buy the insurance would be lesser as compared to that of the previous season.

31

Figure 2: Psychological factors influencing consumer buying behaviour

The findings of the qualitative study also illustrate the fact that, the personal characteristics of

the farmers like stage of the life cycle, age, affordability and risk aversion also influence the

adoption of the product (Personal Factors). A farmer who needs to take care of the

responsibilities towards his family like getting his children married in the short term, or a

farmer whose significant household expenditure is towards the healthcare of a family member

may opt for saving money for these expenses instead of buying the insurance.

5.2 Quantitative Phase - Findings

• Institutional Interface

A number of presumptions that appeared during the qualitative phase were contradicted by

the results of the quantitative phase. Through the qualitative analysis different institutions

were identified which are more active in providing support to a number of developmental

activities in the villages, these institutions were further categorised as government

educational institutes, panchayati raj institutions and corporate institutions.

Table 6: Categories of the institutions

Category Institutions

Corporate Entities CII, PI industries, ITC e-choupal

Government education institutions Agriculture universities

Panchayati Raj Institutions (PRIs) Gram Sewaks, Panchayats

The study shows that around 93% of the farmers are getting assistance through the various

corporate interventions under the CII project in terms of information, knowledge sharing

about the latest farming techniques. Similarly in case of information provided for agri-

32

produce marketing, the help provided by the corporate entities tops the chart as 89% of the

farmers get this information from either ITC e-choupal, CII [chart 4 and chart 5]. ITC e-

choupal has its 10 centres in different villages of Aspur block and the span of operations is in

a total of 35 to 40 villages, whereas CII along with PI industries has been working in most of

the villages of Aspur block and also covers many villages in other blocks of the district.

Farmers were very much satisfied with the amount and the quality of work being undertaken

by CII but some if the farmers were not convinced with ITC e-choupal’s idea of not

procuring the agri-produce because of some quality parameters.

Chart 4: Information/knowledge about

farming techniques

Chart 5: Information/knowledge about

agri-produce marketing

• Demand for the product

The analysis of the data collected through the household survey in the four villages also

revealed that there is a significant demand for the weather insurance product10, where 78.20%

10

The product concept for the weather insurance product being developed at CIRM was inserted in the questionnaire

(annexure 5) and the surveyors were asked to explain the concept to the respondents.

33

of the respondents feel that they require the product. On further analysis, it was found that

92.85% of the farmers, who want to buy the product, cultivate crops like maize, wheat etc.

which are prone to weather risks. During the qualitative phase of the study many farmers

from the Patidar and Rajput community had the perspective that the Tribal farmers are never

interested in buying such beneficial products. The rationale behind developing this

perspective was that over the years tribal farmers have been receiving a large number of

benefits from various governmental schemes and hence have developed a habit of expecting

government reliefs during the times of distress and also otherwise. Contrary to this belief as

per the survey findings 85.80% of the tribal farmers said that they want to buy the product.

• Reasons for the demand of the product

As per the belief of the local institutions in Dungarpur, the number of farmers opting to buy

the insurance depends upon the positive or negative results of the previous season could not

be substantiated through the findings of the survey, according to which approximately 69% of

the prospective buyers would prefer to buy the product every season, even if there are no

payouts are realised. The reasoning behind this could be that the farmers are able to

Product concept – Weather Insurance

SURVEYOR PLEASE READ:

I would like to talk to you about weather insurance. Choosing to buy weather insurance is a way to protect one from

financial shocks related crop failure due to vagaries of weather. I will read you a concept of a new Weather insurance

product, and then I would like to ask for your opinion about it.

Crops

Amount (in Rs.)

Paddy Maize Wheat Gram

Max Sum Insured =

Cost of cultivation

(per acre)

8000-10,000 6,500 – 8,500 9,000-12,000 4,500-6,500

Premium 700-1,000 595-850 840-1,200 455-650

Coverage: The maximum sum insured would be equal to the cost of cultivation as mentioned in the table above.

Benefit: The product will cover the risk due to both excess and deficit rainfall.

Claim processing: within 30 to 45 days from the day certified data is released. This generally takes between 15 to 20 days.

Proximity: The service will be available in the nearest village. The payouts will be made on the basis of a weather station

which is located within a radius of 5 to 10 kms.

34

understand that if the crop production for the season is normal as expected and there are no

crop losses then there would be no payouts.

While analysing the reasons due to which the farmer community doesn’t opt for buying

insurance products a large number of reasons were cited during the qualitative phase, out of

which it was felt that most influencing factor could be the low level of awareness about the

product. During the quantitative phase, it was known that 52% of the farmers feel that the

lack of information about the products dissuades them from buying the product. The lack of

information about the products includes many factors such as lack of understanding of the

technical aspects of the products, low awareness about the procedure to buy insurance etc.

As shown in chart 6, second reason that prevents the farmers (31%) from buying these

products is the lack of trust in the insurance companies, where some of the farmers feel that

the insurance companies could manipulate the data and subsequently not declare the payouts,

and some of the farmers did not have faith in the operations of the insurance companies as

they might get bankrupt anytime.

Surprisingly the study also shows that affordability does not act as a major hurdle for most of

the farmers in buying the insurance product, as only 6% of the respondents cited affordability

as a reason for not buying the product and about 63% of the farmers who had refused to buy

the product due to the premium amount were of the view that they would change their

decision if the product is priced within the premium range of Rs.100- Rs.200.

Chart 6: Reasons for not taking insurance products

35

• Preference for vendors and information channels

In order to cut down on the transaction costs and to build a strong relationship with the

farming community it is necessary for the insurance companies to opt for an agent (individual

or an institution) which has a good presence in the locality and is accessible to the villagers.

The options mentioned by the villagers during the focussed group discussions on their

preference for the insurance vendor were clubbed in the questionnaire with other options

which included CII partners like PEDO (People’s education and development organisation),

Tata Teleservices etc. The analysis as shown in chart 7 clearly depicts that most of the

farmers would prefer having one of the farmer from their own village as the insurance agent

and around 10% of the farmers would prefer buying the insurance from the SHG’s of the

local NGO i.e. PEDO. In order to find out the most suitable information dissemination

channel for the product, the farmers were provided with the options of the SHGs of PEDO,

Audio/visuals, pamphlets/newspapers and local farmer. It is evident from chart 8 that most of

the respondents prefer to get all the relevant information about the product through the SHGs

of PEDO. Interestingly, a considerable number of farmers would like to have the information

through various audio/visuals like movies, documentaries, advertisements which can be

shown in the villages at frequent intervals of time.

Chart 7: Preference for insurance agent/vendor

36

Chart 8: Preference for information channel

5.3 Selection of Potential Partners

One of the objectives of the study was to analyze the potential of the CII partner

organisations and recommend a suitable partner for selling the weather insurance product in

the district. The weather insurance product being developed by CIRM and WRMS will be

sold through a leading insurance company (AICL or ICICI Lombard) and recommendations

for a potential partner in that area will be given to them. This study suggests that there can be

some more options apart from the CII partners such as local traders and PCO booth operators.

As mentioned in Annexure 2, 3 the CII partners that can be the potential vendor for the

product are as follows:

• ITC e-choupal

• People’s Education and Development Organisation (PEDO)

• PI industries

• Speck Systems

• Jain Irrigation

• TATA Teleservices

The potential of the prospective partners for vending out the weather insurance product was

assessed on the basis of a criterion which was derived from the findings of the twelve

principles of innovation in BoP markets, numerous interactions with farmers and other

37

exercises conducted in the study. Following are the parameters that were included in the

criteria:

a. Presence of the institution in the area: The greatest challenge for the BoP markets is

distribution of the products, so the presence of the institution in the area is extremely

relevant, especially if the product has to be delivered till the very last mile.

b. Spectrum of activities undertaken by the institution: Various types of activities

performed by the institution in the target area are important because of the fact that if

the institution has any activity involving financial transaction with the people than it

becomes easy for the cash flow in terms of payouts for the claims. Moreover if the

institution undertakes activities like creating awareness, education then it becomes the

added advantage as far as creating awareness for the weather insurance product is

concerned. Annexure 2 shows all the activities being undertaken by the CII partners.

c. Accessibility of the institution: The study shows that farmers prefer a vendor or

institution whose representative is accessible and updates about the product can be

disseminated at regular intervals.

d. Resources of the institution: Last but not the least, the availability and the quality of

resources (human, capital and technology) that the institution has in that area works in

their favour for being selected as a potential partner. This is due to the reason that

some of the resources can be leveraged by the insurance provider in distributing the

product.

All the prospective partners were further assessed on the basis of above mentioned

criteria, and as is shown in table 7, the assessments about the accessibility and available

resources with the organisation is done in a relative manner based on the observations in

the field, inputs from the villagers, and the analysis of the data.

38

Table 7: Comparison of prospective partners across key parameters

Parameters

Prospective

Partners

Presence Activities Accessibility Resource

s

ITC e-choupal Limited to Aspur block

1. Agri-Produce Marketing

2. Weather Advisaries 3. Distribution of AICLs

weather insurance product

Average Excellent

PI Industries Limited to Aspur block

1. Agri-Input supply

at subsidised rates 2. Organising

Demonstration trials for different crops in villages

with CII. 3. Organising training

exercises for villagers for better farming practices.

Average Average

PEDO

Present in all

blocks and operating for

the past two decades

1. Promoting the formation

of SHGs in almost every village

of the district. 2. Educating the villagers

about various new farming techniques.

3. Promoting new farming equipments, seed variety

through their SHG network. 4. Promoting education

programs and livelihood

security measures

Very Good Very Good

39

Parameters

Prospective

Partners

Presence Activities Accessibilit

y

Resource

s

SPECK

Systems

Present in 3-

4 blocks and planning to

expand its

operations in

all blocks.

1. Taking NRDMS to target villages through the

IT van (Gramin Vikas Rath). 2. Providing technical

support for design of watershed interventions and

structures.

3. Creating awareness about

new agriculture practices

and other development

programs by organising A/V

shows in the villages.

Good Very Good

Jain Irrigation

Negligible presence and

operations.

1. Initiating the contract

farming for onions in some of the villages of

Aspur Block.

Below

Average

Below

Average

Local Traders

Present in all blocks, and

on an average one

trader caters to the

farmers of 5-

6 villages.

1. The local traders

generally have grocery shops,

departmental stores etc.

2. Traders also lend small

amounts of money to the

villagers at high interest

rates as and when it is

required. Excellent Average

Tata

Teleservices/

PCOs

Present in all

blocks, and

on an

average one

booth caters

to the

population of

2-3 villages.

1. The PCO booths provide

the facility of local and

interstate calls.

2. Mobile phone recharges.

Good Average

A number of CII partners have started their operations in the district but their reach has been

limited to a certain extent. ITC e-choupal had started its operations about two years ago in the

Aspur block with the core activity being agri-produce marketing, but since then instead of

expanding their operations in other blocks, they have stopped the procurement of agri-

produce from their e-choupal centres in Aspur. The option of leveraging on the network of

the local traders in the villages as the vendors of the product can’t be worked out because of

40

the fact that many farmers perceive these traders as exploitative in nature, where they feel

that they would not commit the mistake of buying the insurance product from the traders.

Presence of the network of SHGs in almost all the villages of the district would certainly be

an added advantage for the insurance company in cutting down the transaction costs and

keeping a low premium for the product. These networks would also prove fruitful in

spreading the awareness about the product. Furthermore, the representatives and volunteers

of PEDO command immense respect from the villagers due to their accessibility and their

development work. The IT van (Grameen Vikas rath) of SPECK systems which provides

knowledge about good farming techniques to the villagers can be leveraged for spreading the

awareness amongst the villagers about the benefits being offered by the product through

various Audio/Visuals. SPECK systems also plans to roll out more number of IT vans for

expanding its operations in the mot interior parts of the district, so thee resources can also be

used in selling the product and simultaneously disseminating knowledge related to the

products.

5.4 Summarising Analysis and Results

The expectations of the agri community from the new weather insurance product and the

insurance companies can e summarised on the basis of the analysis of the findings and results

of both the phases of the study, and they are as follows:

1. Farmers need a weather insurance product which would cover the most of the

production risks attached to agriculture. This is an obvious demand as the farmers

would like to be secured against every possible production risk like, drought, excess

rains/floods, pest attacks, diseases etc. When analysed through the insurance

companies’ perspective, it would be a difficult task to offer a product covering all

possible risks and keeping a low premium amount simultaneously.

2. Farmers need weather stations which are accessible for verification of data and most

importantly they feel that if the weather stations are located near to their village, the

data collected would be more accurate. There is also a sense of psychological

satisfaction behind this argument, where in the farmers feel more secured and

satisfied if they can verify the data by themselves.

3. Farmers feel that the claim settlement process is an extremely lengthy and

bureaucratic process, where the farmers would have to deal with various technical

aspects of the insurance products. In short, it can be said that farmers need a simple

41

product which can be easily understood and the claim settlement process is easy,

faster and less bureaucratic.

4. As mentioned in the study, lack of information acts as the major hindrance to farmers

for buying the product. So, there is a definite need for some representatives of the

insurance company or from the insurance vendor to disseminate the relevant

information about the product to the villagers on a timely basis. The most important

factor here is that the representative should be easily accessible by the villagers.

5. The potential channel partners should be chosen from a long term perspective

considering their network, accessibility, activities and the resources in the Dungarpur

district and based on this criterion either PEDO or SPECK systems can be selected.

6. CONCLUSION

Developing innovative solutions that can be used as risk management instruments by the

rural poor households seems to be the need of the hour, poor farmer households being the

most vulnerable are acutely affected by the vagaries of nature. They have to cope up with the

losses by adopting a gamut of strategies like migration, taking credit loans, selling livestock

and other assets etc. Introduction of risk mitigation mechanisms like weather insurance may

motivate the farmers in shifting the crops or changing the cropping patters towards the

insured crops, which would further help them reduce the risk in crop production. It may

happen that instead of diversifying the weather risk by cultivating different crops, the farmers

might opt for new crops which give higher outputs, which in turn provides an encouragement

to the various agri-business companies to take interest in the sector and invest.

Farmers of Dungarpur were really excited when the concept of the weather insurance was

explained to them, excited with the features of the product, excited with the support activities,

excited with the option that somebody who is accessible and known to the villagers would be

able to distribute the product. For those who understood the importance of hedging risk, the

introduction of this product which provides a cover for most of the production risks and is

also affordable, meant a lot. Many presumptions about the tribal community like that the

tribal farmers would never prefer to spend money for any insurance products were falsified

by the study where a significant demand for the product is from the tribal farmers.

42

The pilot launch for the product can be done in the Aspur block of Dungarpur district because

people in many villages are aware of the concept as AICLs product has been present for over

two years. However, a need exists for reaching out to a large number of villagers who are

absolutely unaware of the benefits that can be derived from the insurance products. The study

indicates that most of the farmers do not buy insurance only due to lack of knowledge about

the product and for most of them affordability is not a constraint to a certain extent. The

distribution of the product can be done through PEDO’s SHG network or through SPECK

systems’ IT van (Grameen Vikas Rath) and simultaneously costs could be brought down by

leveraging on their resources and network in the villages of Dungarpur.

7. LIMITATIONS

a. Study concentrated in Aspur block: The study was concentrated in the four villages of

Aspur block. It is evident from table 4, that villages in this block are far different from

those in the other blocks of the district. The weather insurance product being designed

by CIRM & WRMS under the CII-Dungarpur initiative is to be launched in all the

blocks of the district over a period of time. So there was a need to cover villages from

the other blocks in the study, which was not possible due to constraints like

unavailability of the CII facilitators in other blocks, duration of time allocated for the

study and a specified budget.

b. Low participation of women in PRA exercises: The findings of the qualitative phase

clearly indicate that the women folk in the tribal households have a considerable role

in household decision making. Furthermore, one of the objective behind conducting

PRA exercises and focussed group discussions was to get different perspectives from

both the men and the women folk of the villages. Various constraints like social

norms, and involvement of women in other obligations resulted in low participation of

the women folk in two villages i.e. Bodigama Bada and Oda and hence, the primary

information from the vantage point of the women folk wasn’t collected as per the

expectations.

c. Lack of trained surveyors: The household survey to be conducted across the four

villages required young educated people, and it was difficult to locate the required

number of people in every village so that the survey is completed within the stipulated

43

period of time. Once the resources were located they had to be trained and monitored

for a period of two days for conducting the survey.

44

8. REFERENCES

1. Hand in hand microfinance bulletin - Volume 2 - Issue (1 July 2008)

2. Patterns of Rainfall Insurance Participation in Rural India, Xavier Giné, Robert

Townsend, and James Vickery, Federal Reserve Bank of New York Staff Reports, no.

302 - September 2007

3. Scaling Up Micro insurance: The Case of Weather Insurance for Smallholders in

India, Ornsaran Pomme Manuamorn, World bank, Agriculture and development,

Discussion Paper 36

Websites accessed:

1. http://www.fenews-digital.com/fenews/20060506/?pg=9 (Accessed on 12.06.08)

2. http://www.ccsindia.org/ccsindia/policy/live/studies/wp0010.pdf (Accessed on

12.06.08)

3. http://www.weather-risk.blogspot.com/ (Accessed on 16.06.08)

4. http://www.weather-risk.com/Innews.aspx (Accessed on 16.06.08)

5. www.globalrisk.com (Accessed on 17.06.08)

6. http://www.munichrefoundation.org/StiftungsWebsite/Projects/Microinsurance/2006

Microinsurance/Microinsurance_Compendium.htm (Accessed on 20.06.08)

7. http://siteresources.worldbank.org/DEC/Resources/WeatherInsuranceInSemiAridIndi

a.pdf (Accessed on 20.06.08)

8. http://statistics.rajasthan.gov.in/ (Accessed on 14.07.08)

9. http://cii.in/menu_content.php?menu_id=566 (Accessed on 16.07.08)

10. http://des.kar.nic.in/cis/Guidelines.pdf (Accessed on 19.07.08)

11. http://indiabudget.nic.in/ (Accessed on 19.07.08)

12. http://mapsofindia.com/maps/rajasthan/districts/dungarpur.htm (Accessed on

10.08.08)

45

Annexure 1

District Map of Dungarpur

Source: www.mapsofindia.com

46

Annexure 2

Private-Public-Peoples Partnership Convergence Chart-CII

Objective Activity Responsible

Agency

1. Access to water

for farmers in rain

fed areas.

1. Participatory Micro Planning and Resource Mapping

(PRM) in Charwada Panchayat.

2. Upscaling micro planning in a cluster of Panchayats on

Milli watershed basis, which includes Charwada.

3. Carry out similar exercises in one cluster of panchayats

in each of the remaining blocks.

4. Watershed based treatments.

5. Land and water use plan on watershed basis.

6. Formation of water Users Groups to ensure assured

water to every family for at least 1 to 2 bigha land

CII

2. Agriculture

Technology

Transfer in canal

command areas as

well as rain fed

areas.

1. Development of ICT material for educating farmers on

improved agricultural techniques for major crops of the

district.

2. Controlled Crop Demonstration trials, two trials each

village (26 villages of ITC command area and 4 villages of

Charwada cluster of panchayats)

3. Development of local trainers through rigorous

classroom as well as field trainings.

4. IEC campaign in adjoining panchayats of Charwada.

5. Exposure visit to Jain campus, Jalgaon.

6. Replication of same Agriculture Technology Transfer

activity in other clusters of panchayat in other blocks taken

up for micro planning.

PI Industries

3. Promotion and

Motivation of

farmers (SHGs) to

adopt improved

agriculture

1. Self paid crop demonstrations with SHGs.

2. Regular trainings at critical crop stages.

3. Weather insurance cover to crop sown.

4. Provide Seed, fertilizers and other input along with

weather insurance cover on credit basis.

PEDO-PI-ITC

47

practices.

4.Breed

Improvement in

Milk Route Areas

1. Development of local animal husbandry extension

workers (Gopal) to provide AI, feed Management, health

management related services at the door step of the

farmers.

2. Backward and forward linkages to the gopal centers for

initial five years.

3. Physical Target oriented activities in initial stages.

BAIF

5. Community

Based Integrated

Water and

Agriculture

Resources

Management

through Lift

Irrigation Schemes

1. Development of community based Lift Irrigation

System.

2. Induction of energy saving Grundfos pumps. Grundfos

pumps are 2 times expensive than other available pumps

but the energy saving is in the range of 20-30%. The pay-

back period on additional costs is 1.5 - 3.0 years depending

on site specific pump selection.

3. Capacity building of user group through regular

monitoring and training.

4. Promotion and induction of water saving devices such as

drip and sprinklers.

PEDO/ Jain

Irrigation/Grun

dfos Pump

6. To bridge gap

between demand

and supply of good

quality Seed and

promote seed

production as an

income generating

activity.

1. Introduction of seed production activity preferably with

SHGs in the district.

CII - PEDO -

RSSC (Private

sector seed

companies are

also being

identified)

7. Promote IT

education in the

district.

1. Conversion of 9th and 10th class computer syllabus into

software material.

2. IT education through mobile van.

3. IT training to interested teachers.

4. One bus is Supplied by District Administration and one

from IT department.

Microsoft-

District

Education

Department

48

8. To Provide

Market Access for

Agricultural

Produce

1. Set Up e-choupals (IT Kiosk) in cluster of villages.

2. Agri. Extension services through IT Kiosk.

3. Procurement of agriculture produce at ITC base rates.

ITC-E-

Choupal

9. To Develop road

map for Improving

Crop and Water

Energy

Management in the

district

1. Selected Charwada panchayat of Bichhiwada block for

initial intervention.

2. Controlled crop demonstration trials on major crops of

the area.

3. Introduction of vermicompost technology in the area.

4. Organized exposure visits to local farmers.

5. Identify gaps in watershed development programme.

ICRISAT as

implementing

agency.

Finding from

Coca Cola

Foundation,

Atlanta.

10. Skill Building 1. Notify IMC as autonomous body.

2. Restructuring of Courses as per market demand.

3. Constancy work through ITC as an income generating

activity.

GOR - CII -

ITI

11. Income

generation

through

commercial

Jatropha plantation

on waste land

1. Set up non-profit Jatropha resource center.

2. Establish and demonstrate improved plantation

techniques to promote Jatropha plantation in the district.

3. Establish bio-diesel plant in the district and offer buy-

back guarantees to farmers.

4. Plough back income generated by resource center in to

R&D and extension activity.

Titagarh Bio-

Tech Pvt. Ltd

12. Establishment

of NRDMS

(Natural Resource

Data Management

System) Center

1. Prepare object oriented Geo-referenced digital database

of Natural and other Resources of Dungarpur district on 1:

25,000 scale using SRS and GIS technologies

2. Develop a Geographic Information System to support

the spatial information need of various stakeholders

3. Collect, collate and analyze both primary and secondary

data related to various Natural resources, amenities,

demography and socio-economic status at district / tehsil /

block / village level and prepare related maps in response

to users need assessment.

DST-District

Administration

13. Contract Proposal being developed Jain Irrigation

49

Farming of onion Systems Ltd.

14. Production of

medicinal and

herbal plants.

Proposal being developed Ayurvedic

Drug

Manufacturers

Association

15. Mobile health

unit for preventive

health care and

nutrition services.

Proposal being developed Ayurvedic

Drugs

Manufacturers

Association

Source: CII

50

Annexure 3

CII Dungarpur Initiative: Programme Impact Chart

Company Objective Coverage

ITC- E Choupal Market access to agricultural

produce

10 e-choupal, 35-40 villages,

2000 farmers.

Microsoft. - IT

Bus Programme

IT education to 9th and 10th class

students of 35 remote schools.

3000 Students, 300 teachers

have been trained imparting knowledge to average 50

students each.

PI-Agri Extension Agri Extension and develop local

trainers

30 villages, 30 trainers, 60

controlled crop trials. Almost coverage of 1500-2000 farmers

CII-PEDO-Seed Production

Introduce seed production, create awareness about quality seed,

increase Hybrid Seed adoption level

10 villages, 164 farmers, 45 ha land.

PEDO-ITC-PI-

Improved Agri. with SHG

Improved Agriculture with SHG

members.

175 farmers.

ICRISAT Improved Crop & Water

Management through participatory

crop demonstrations

Directly 60 farmers, indirectly

1400 farmers, 57 controlled crop

trials.

CII-PEDO-Micro

plan

Create basis for up scaling of PI-

ICRISAT-ITC programme.

Five villages - one panchayat

(First phase), up scaling into

cluster of panchayat in next

phase.

Jain Irrigation Training to watershed department

staff of Govt. of Rajasthan

360 officers are to be trained in

9 batches, 4th batch training in

progress.

Source: CII

51

Annexure 4

Social and Resource maps:

Village Bodigama Bada:

Village Oda:

52

Village Pachlasa Bada:

Village Punjpur:

53

Annexure 5

Household Survey Questionnaire

[0] descriptive identification of sample household

1. state/u.t.: Rajasthan 5. hamlet name/ address

2. district: Dungarpur 6. block:

3. tehsil/town : Aspur 7. name of head of household:

4. village name: 8. name of informant:

[1] Identification of sample household

item

no. item Code

1. Srl. number of sample

village/ block

2. state-region RAJ

3. sample household number

4. Response Code

[2] Particulars of Field Operation

Sl.

no.

item Investigator

1. name (block letters)

2. date(s) of : DD MM YY

survey/ inspection

3. total time taken to canvass

schedule 1 (in minutes)

4. Signature

RURAL

CENTER FOR INSURANCE AND RISK MANAGEMENT

STATE

HOUSEHOLD SURVEY

FIRST ROUND : JULY 2008

HOUSEHOLD/ GROUP SCHEDULE 1

54

[3] Household characteristics

1. No of members in the household

(Household Size)

8. Monthly household income

Less than Rs 500

2.

Household

Occupation(Agriculture/Non-Agricultural Activities as the

main occupation)

Rs 500-999

3. Whether operated any land for

agricultural activities during last

365 days

Rs 1000-5000 4. House type

Kuccha/Pucca/Semi

Pucca

5. Social group [ST/SC/OBC/Gen] More than Rs 5000

9. Monthly household expenditure

6. Are you BPL? (Yes/No)

Less than Rs 500

7.

Are you a member of any SHG

or cooperative? (Yes/No)

Specify

Rs 500-999

Rs 1000-5000

8. Whether Beneficiary of NREG

More than Rs 5000

9.

Are you a beneficiary of any

other scheme from the

government, NGO or other

projects? Specify

[3.1]Proportion of income spent on (percentage):

1. Household expenses (Food, Clothing, Education): ___________

2. Agriculture & Livestock: _________________

3. Marriages Social and religious purposes: ______________

4. Others (please specify): __________________

55

[4]. Family Details (Members):

Codes for Block 4

General education code: not literate – 01,

primary – 02

middle – 03

secondary/senior secondary– 04,

graduate/ and above –05,

Usual Activity Code For rural areas:

self-employed in agriculture-1

agricultural labour-2,

self-employed in non-agriculture-3,

other labour-4,

Service-5

Others-9.

[5] Assets: Land Ownership as on Date of Survey

S.No

of

plot

Area owned (Bighas)

Use (Name of the crops in each

category)

Irrigation source

(Irrigated/rain fed)

Up land

Medium land

Low land

Up land

Medium Land

Low land Up land Medium land

Low land

Season Name of crop

Irrigated/rain fed

Yield

Normal year (KG)

Yield

Drought year (KG)

Yield

Excess rainfall year (KG)

Rabi Wheat

Gram

Sl. no.

Name Relation Sex

(M-1

/F-2)

age

(years)

general education

(code)

usual activity

Principal subsidiary(economic)

status (code)

No. of months worked in last

year

status (code)

No of months worked in last year

56

Kharif Paddy

Maize

Guar

Others

(specify)

Summer

5.1. What crop would you cultivate in Rabi and Kharif next year?

RABI KHARIF

Same as this year Same as this year

Something new Something new

Haven’t thought as yet Haven’t thought as yet

5.2. If there is a crop failure, what helps you the most?

1- Government relief

2- Local trader (baniya)

3- Bank loans

4- Weather insurance

99- Others (Please specify)

5.3. What is the source of information regarding farming practices?

1- Agriculture University

2- CII/PI

3- ITC

4- Gram Sewak

5.4. What is the source of information regarding marketing your produce?

1- Agriculture University

2- CII/PI

3- ITC

4- Gram Sewak

[6] Livestock and Poultry Ownership

S.n

o

Animal Number

1 Milch cows Cross bred

2 Milch cows- Desi

3 Buffalo

4 Bullock

5 Sheep

6 Goat

7 Hen

8 Chicken

9 Others

57

[7] Durable Assets:

Do you have electricity connection? (Yes/No) ------------------------- Sl. No.

Item Owned as on date of survey

Tick , if owned

1. TV

2. Radio

3. Electric equipments

Fan/Bulbs/Tube light

4. Pressure Cooker

5. Fridge

6. Others Record Player/Tape Recorder/Stereo

7. VCD/DVD/Other players

8. Jewellery

[8] How much time does it take you on average to get (using the transport you use the

most often) to the nearest: (in hours; includes all the time usually spent to get there) � Main road _________________

� Telephone that you can use _________________

� Primary health care center _________________

� Local trader (baniya) _________________

� Hospital _________________

� Bank _________________

� College _________________

[9] Transport Equipment Sl.

no

Item No. owned as on

date of survey

1. carts (hand-driven / animal driven)

2. bicycles

3. motor cycles/ scooters/ mopeds

4. cars/jeep/van

5. tractor/ trailers

6. other transport equipment : cycle rickshaws, auto rickshaws , bus, etc

7. total ( items 1 to 9)

58

[10]. Financial Assets (Other than shares and debentures) as on date of Survey

Sl.

no.

Item Yes/No Value

1. government certificates viz. NSC , Indira vikas patra, kisan vikas patra, KCC

2. deposit in post office including national saving scheme deposits

3. deposit in co-operative society/Co-operative bank

4. deposit in commercial bank (SBI, Regional Rural Bank etc)

5. Deposit in self-help group (SHG)

6. Pensions/provident fund

7. cash in hand (At least Rs.500 per month)

8. other financial assets

II. Insurance – knowledge, use and attitude

1. What is the level of knowledge about insurance services?

S.no Response

Tick appropriate

boxes

1. Have you ever heard/read about any insurance service?

If yes, then please tell me if you have ever heard/read about the

following insurance service

2. Health (including illness and accidents)

3. Life (death and disability)

4. Property

5. Crop Insurance (Weather/Rainfall Insurance)

6. Livestock Insurance

2. Have you or any of your family members had a voluntary insurance policy during the

last 15 years? 0 – No

1 – Yes (used to have or have now) 99 – hard to say

2.1 Why not? Please tick on the appropriate reason that the farmer provides.

S.no Response

Tick appropriate

boxes

1 I have never heard of insurance

2 I do not have enough information about insurance

products

3 I do not know how insurance works

4 I do not know where to find insurance

5 I think the insurance agents are too far from the place I

live

59

6 My household has not needed insurance because we can manage problems ourselves

7 I think nothing serious will happen to my family or me

8 I find insurance too expensive

9 I understand that insurance claim realization process is a

very long process

10 I do not trust insurers; I have heard that they do not pay

back.

11 I do not have trust in insurer - heard that insurers do not

pay (manipulate with conditions, etc.)

12 I do not trust insurance companies; they may run away

stealing my money.

13 I do not trust insurance companies, they may go bankrupt

Weather Insurance: Product Concept

Product concept – Weather Insurance

SURVEYOR PLEASE READ:

I would like to talk to you about weather insurance. Choosing to buy weather insurance is a

way to protect one from financial shocks related crop failure due to vagaries of weather. I will read you a concept of a new Weather insurance product, and then I would like to ask for

your opinion about it.

Crops Amount (in Rs.)

Paddy Maize Wheat Gram

Max Sum

Insured = Cost

of cultivation

(per acre)

8000-10,000 6,500 – 8,500 9,000-12,000 4,500-6,500

Premium 700-1,000 595-850 840-1,200 455-650

Coverage: The maximum sum insured would be equal to the cost of cultivation as mentioned

in the table above.

Benefit: The product will cover the risk due to both excess and deficit rainfall. Claim processing: within 30 to 45 days from the day certified data is released. This generally

takes between 15 to 20 days. Proximity: The service will be available in the nearest village. The payouts will be made on

the basis of a weather station which is located within a radius of 5 to 10 kms.

D1. Do you think you need such a product?

1 – Definitely do not need the product 2 – May need the product sometimes

3 – Definitely need the product

60

D2. What do you think about product features?

Sno Item Rating

Strongly

dissatisfied

Somewhat

dissatisfied

Neither

agree nor

disagree

Satisfied Strongly

satisfied

1 The coverage of the

product is adequate

2 Amount obtained is

reasonable

3 The premium is

reasonable

4 Claim processing is easy

5 Provider is trustworthy

6 The provider is located

close by

D3. How willing would you be to buy this product?

1 – Definitely not willing –

2 – Rather not wiling –

3 – Rather willing

4 – Definitely willing

99 – Hard to say (do not read)

D4. Would you recommend this product to your relatives and friends?

1 – Definitely no

2 – Rather no

3 – Rather yes 4 – Definitely yes

99 – Hard to say (do not read)

ASK ONLY TO THOSE WHO ARE WILLING TO BUY

D5. Which crops would you like to insure?

2-Wheat 3-Paddy

4-Maize

5-Gram

6-Guar

7-Barley

8-Moong

9- Soyabean

99 – Hard to say (do not read)

D6. Where would you prefer to buy this insurance?

1 - Local farmer of the same village

2 - Local farmer from a nearby village

3 - Local trader (Baniya)

4 - Local PCO operator 5- PEDO (Mada sanstha)

61

99- Others (please specify).

D7. Where would you like to have all the relevant information regarding this product?

1 – Consultancy from local farmer/ trader

2 – Consultancy from NGO (Mada sanstha)

3 – Audio visuals

4 – Pamphlets/Newspaper/Posters

D8. If there are no payouts, then what would you do for the next season?

1-Buy the insurance once again 2-Would not buy it for next season

3- Don’t know

ASK ONLY TO THOSE WHO ARE NOT WILLING TO BUY

D9. And if the premium is lowered to Rs.___ per crop, how willing would you be to buy

the product?

0 – I will not change my decision

1 – I may reconsider my decision

2 – I would be willing to buy it

D10. Which crops would you like to insure? 2-Wheat

3-Paddy

4-Maize

5-Gram 6-Guar

7-Barley 8-Moong

9- Soyabean 99 – Hard to say (do not read)

D11. Is there any price at which you will change your decision and decide to buy?

0 – No, I am not interested at all

Yes, the price is [_____________] Rs. per crop

62

III. Shock /Risk Survey

1. In the past some years, has this household been affected by a shock (Tick the CODE

of the appropriate shock)—an event that led to a reduction in your asset holdings,

caused your household income to fall or resulted in a significant reduction in

consumption? We would like to learn more about these events.

During last

12 months

period

During last 1-

5 years

period

6 to 15 years

ago

1. Has there

been a weather

or environmental

shock?

Drought

Too much rain or flood

Hailstorm

Pests or diseases and

others

2. From the following given strategies (Ex-ante), what strategies does this

household adopt to avoid the impact of these shocks before they actually occur? Please

tick the appropriate response.

S.No Strategy Never Sometimes Everytime

1. Migrated to other regions

2. Children or other family

members went to work

along with deliberate

reduction in

consumption expenditure

3. Produce differents goods

or perform different

activities at the same

time (Diversify

production or activities)

4. Saved money

5. Saved food grains

63

3. From the following given coping mechanism strategies (Ex-post), what strategies

does this household do to reduce the impact of the shock, if it has already occurred?

Please tick the appropriate response.

S.No Strategy Never Sometimes Everytime

1- Migrated to other regions

2- Children or other family members went to work

along with deliberate reduction in consumption

expenditure

3- Asked for a cash loan

from family member, a friend, moneylender or

work

4- Spent savings or

investments

5- Pawned goods

6- Sold livestock or assets

7- sold house or land

8- Reduce food

consumption or stop

consuming some products

or services

9- Applied for a cash loan

from a bank

10- Take help from

government organizations

11- Take help from NGOs

12- Borrowed from MFI/ Co-

operative Society

13- Didn’t do anything

-----------------------------------------------End of the questionnaire------------------------------------

Source: IFMR – CIRM

64

Annexure 6

Income/Expenditure mapping: All the participants were told to divide themselves into three

groups of poor, middle income and rich households and each group was supposed to identify

its representative. Groups were made to hypothesize a situation where the

income/expenditure of the whole village is Rs.100 per month, and they were supposed to

divide this sum into three different categories of households across various sources of

income/expenditure. Further a mean of all the numbers for all the three categories was taken

to figure out the similarities or differences in the sources of income/expenditure across the

villages. The purpose for taking the mean for all household categories was only to get an

indication of the type of income and expenditure of the villagers.

From the income mapping exercise [table 8] it was inferred that the chief source of cash

inflow in all the four villages was agriculture and livestock rearing, whereas different

alternative sources of cash inflow emerged for all villages. While observing the cash inflow

from NREGS, it becomes evident that ODA and Pachlasa Bada (both having a large tribal

population) have a larger share than Punjpur and Bodigama Bada (Mixed population, mostly

Patidars) for which the secondary source of inflow falls into the category of

migration/labour/jobs. This is due to the fact that many people from the Patidar community

are either self employed in different small businesses in cities like Ahmedabad and Mumbai

or prefer to take up jobs in these cities.

Table 8: Monthly Cash Inflow Chart for Villagers (all the figures are mean values in

INR terms)

Villages

Agriculture

and

Livestock

NREGSMigration/

Labour/jobsOthers

ODA 13.33 6.67 5.00 8.33

Pachlasa

Bada 14.67 4.33 4.67 9.67

Punjpur 16.67 3.33 10.67 2.67

Bodigama

Bada 15.00 3.33 11.67 3.33

The expenditure mapping exercise [table 9] revealed that a large some of expenditure for the

villagers from their income goes towards household activities and their lifestyle, which

includes expenses incurred towards food, transport, clothes etc. Interestingly, it was observed

that a lot of cash outflow was towards the social activities like, festivals, religious activities,

65

marriages etc. If the cash outflow towards education is analysed it can be said that a lot of

findings from the FGDs were triangulated, wherein it is evident that amongst the tribal

villages, the cash outflow of Oda (high literacy rate) towards education is comparable to that

of other villages like Bodigama Bada and Punjpur. All these findings were substantiated by a

descriptive analysis of data collected through the questionnaire [Chart 9, 10, 11].

Table 9: Monthly Cash Outflow Chart for Villagers (all the figures are mean values in

INR terms)

Villages

Agriculture

and

Livestock

EducationHousehold

Expenses

Social

Purposes

ODA 8 5 13.33 16

Pachlasa

Bada 6.67 3.33 16.67 10

Punjpur 10 6.67 6.67 15

Bodigama

Bada 6.67 5 10 7.5

Chart 9: Expenses on household activities and lifestyle

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Chart 10: Expenses on social purposes

Chart 11: Expenses on agricultural and livestock rearing purposes

67

Annexure 7

Details of FGDs

Set of questions:

i. What are the main activities of the villagers?

ii. What are the main problems faced by the villagers?

iii. What are the different shocks you are exposed to- Weather, Health, Life, Market,

Property and others?

iv. Are there any Government or non-governmental interventions/projects in your

community? Are you satisfied with them- why or why not?

v. How do you manage these shocks- do you prepare for these shocks beforehand or

do you just cope with it?

vi. What are the impacts of those shocks?

vii. What are the various things you do in case the event happens?

viii. In your opinion what do you think are the three biggest problems of the village?

ix. Do you know about Insurance and its benefits? Why/Why not?

Participants: The group comprised of both adult men and women, where the group size was

15-18 people.

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Comparison of villages: The comparison of the four villages covered under the study on the

basis of the standard set of questions asked in the discussions is as follows:

Village

Parameter

ODA PACHLASA

BADA

PUNJPUR BODIGAMA

BADA

Location Located in the

interiors of the

block at about 8

kms. from the

state highway.

Village boundary

extends up to

state highway 23,

but most of the

hamlets are

located in the

interior parts

which are

approximately 5

to 6 kms. from

the highway.

State highway

which connects

Dungarpur to

Udaipur passes

through the village.

Located in the

interiors of the

block at about 12

kms. from the state

highway.

Main

Problems

Lack of

sanitation

facilities,

Seepage in farm

lands, lack of

information

regarding

agriculture.

Lack of irrigation

facilities, no

medical facilities,

access to credit,

sanitation

facilities, less

electricity, lack

of information

regarding agri-

inputs, no

available

channels for

marketing agri-

produce.

Bad quality of land,

fragmented land,

bad drinking water,

unavailability of

credit and labor,

lack of sanitation

facilities, attacks of

monkeys on farm

produce.

Lack of irrigation

facilities, Less

electricity, attacks

of monkeys and

pests on farm

produce,

unavailability of

marketing

channels, and lack

of quality

education

institutes,

sanitation facilities,

drinking water, and

problem of

unemployment,

69

unsatisfied with

gram Sewak.

Different

Shocks

Drought, excess

rainfall,

seepage, health

problems.

Droughts,

Excess/Deficit

rainfall, pest

attacks on crops,

death of people

due to lack of

healthcare

facilities.

Excess/Deficit

rainfall, droughts,

pest attacks on

crops and health

problems.

Excess rainfall,

drought (lack of

forage, water

which sometimes

results in loss of

livestock), no

marketing channels

(so selling the

produce at market

prices is a

problem).

GOs/NGOs GOs:

Van Suraksha

Samiti,

Rajasthan

Adivasi Sangh,

Sarpanch, Gram

Sewak,

NREGS.

NGOs/Private:

PEDO, Sadguru

Foundation,

CII, PI

industries,

Gramin Vikas

Trust.

GOs:

Rajasthan

Adivasi Sangh,

Gram Sewak,

Sarpanch,

NREGS.

NGOs/Private:

PEDO, Vagad jan

jagruti sanstha,

CII, PI industries,

GVT.

GOs:

Sarpanch, Gram

sewak, NREGS.

NGOs/ Private:

PEDO, CII, PI

industries, ITC,

Sarita sanstha.

GOs:

Sarpanch, NREGS,

Gram Sewak.

NGOs/ Private:

CII, PI industries,

ITC.

Satisfaction Villagers are

very much

satisfied with

the work of CII

Villagers are very

happy with the

work done by

sarpanch, gram

Villagers are

satisfied with the

performance of the

government

Villagers are not

satisfied with the

work done by

Gram Sewak and

70

and its allies,

PEDO, whereas

the feel that the

work done by

GVT and

Sadguru

foundation isn’t

exactly required

for the village.

Villagers

believe that the

work done by

the Gram

Sewak and

Rajasthan

Adivasi Sangh

are benefitting

the village

tremendously.

Sewak, Rajasthan

adivasi sangh,

whereas people

are not satisfied

with the

contractors of

NREGS.

Farmers are very

much satisfied

with the work

done by CII, PI

industries,

PEDO.

functionaries like

sarpanch, gram

sewak and

NREGS.

Satisfaction levels

pertaining to the

performance of the

NGOs like PEDO,

Sarita sanstha are

high whereas those

related to private

organisations like

CII, ITC is

moderate.

are concerned

about the biased

behaviour of

Sarpanch.

Villagers are happy

with the work done

by CII and its

allies, whereas they

aren’t very much

satisfied with ITC’s

work.

Coping

Mechanisms

People rely on

Govt relief

programs, sell

their assets like

land, jewellery,

livestock, and

even share their

food with

livestock.

People heavily

rely on Govt

relief programs,

Migrate to other

places like

Ahmedabad,

Mumbai for jobs,

take credit from

local

moneylenders

(baniyas), people

sell their assets.

In case of excess

rains shift the crop

from maize to

paddy, Rely on

government reliefs,

take credit from

local

traders/moneylende

rs, and sell their

assets, going to

Mumbai for

starting small

businesses or for

Villagers rely on

the local trader or

moneylender for

taking credit,

practice shared

farming, and sell

assets. Many

people take up jobs

in

Mumbai/Ahmedab

ad or start small

businesses.

71

jobs.

Biggest

Problems

Sanitation,

Seepage into

the farm lands

because of the

canal, Health

care facilities.

Marketing

channels for the

agri-produce,

irrigation

facilities, access

to credit.

Low income levels,

Bad quality

drinking water,

Marketing the agri-

produce.

High

unemployment,

Lack of quality

education and

absence of a Mandi

for marketing the

agri-produce.

Awareness

Levels about

Insurance

Majority of the

people present

were well aware

about Insurance

and many of the

households

have life

insurance

policies.

Very less number

of people (mostly

Patidars) knows

about insurance

and has taken life

insurance

products whereas

the other

communities like

tribals were

totally unaware

about the concept

of insurance.

People are well

aware about

insurance and

many have taken

life insurance.

The tribal

community is very

low on the

awareness levels

about the concept

of insurance though

some of the people

from the

communities have

taken life insurance

products from LIC.

The Patidar,

Brahmin and Jain

community are

well aware about

the Insurance

products.

Awareness

Levels about

Weather

Insurance

They were not

aware about

Weather

insurance but

some of the

farmers were

aware about

crop insurance.

Very low levels

of awareness

about weather

insurance/crop

insurance

products.

People know about

the concept of

weather insurance

because of the

presence of ITCs

(AICLs) product.

People know about

the concept of

weather insurance

because of the

presence of ITCs

(AICLs) product.

72