Sie sind auf Seite 1von 6

International Journal of Agriculture and Crop Sciences.

Available online at www.ijagcs.com


IJACS/2012/4-15/1033-1038.
ISSN 2227-670X 2012 IJACS Journal

Economic Security through Rural Insurance in India


Karim. MH (Karim Koshteh)a, Kiyanoush Ghalavandb*, Karim Elyasc
a

. Associate Professor, University of Economic Sciences, Tehran.


. Ph.D. Research scholar in Economics, Department of Gandhian Studies Panjab University. Chandigarh, India.
c
. HRM, Post graduate student, Jamia Millia Islamia, New Delhi
Corresponding author email: karimsistani482@yahoo.cam, kiyanoush1973@gmail.com
ABSTRACT: India lives in villages and about fifty per cent of the 5.76 lakh villages of the country are
situated in different terrain characterized by poor socio-economic conditions. Development of rural areas
has been one of the paramount concerns of India's successive Five Year Plans. A strategy to tackle
poverty was adopted in the Sixth Plan as the benefits of general development programme had proven
unsuccessful for the eradication of the poverty of the masses.
Insurance is the safeguard against probable danger. Insurance can be bought against a particular event
for its possible occurrence. It is a prevarication tool used as a preventive measure against future losses.
This device is applied for minimizing or managing the future contingent risks. It is a mode of financially
managing instrument through which a person gets the benefit of insurance coverage for a particular
event. Therefore, a person buys future contentment and pleasure living through insurance. Rural
Insurance refers to the safeguard against probable danger involved in rural activities. Rural activities
where insurance coverage is required refer to agricultural operations, raring of livestock, health-related
problems etc. The fundamental aim of this article is to empower the people to act on their own behalf and
reestablish their livelihoods in a culture of peace. As such, this paper seeks to address the human
security needs of the targeted communities in the areas of public safety, coexistence and reconciliation,
health, education, training, employment and institutional support. Accordingly, the paper focuses on rural
& agriculture insurance for economic, human security in rural India.
keywords: human security, rural, insurance, India
INTRODUCTION

Farming is a risky business. For example, arable farmers are exposed to meteorological events, such as
hail, storm, drought, frost, heavy precipitation, excessive heat, and crop diseases such as brown rot, which may
result in potential damage to crops (Langeveld et al., 2003). In dairy farming, epidemic diseases, such as FMD
(foot-and-mouth disease) and BSE (bovine spongiform encephalopathy), cause severe economic losses (Huirne et
al., 2003). Rural Insurance programs are designed to cover various risks that affect the rural population and are
gaining importance all over the world. India, being one of the fastest growing nations of the world, offers great
scope and potential for the insurance programs; Rural Insurance being a frontrunner among them. Indian insurance
market can be broadly divided into urban and rural markets. These two segments are diverse in nature and have
distinguished characteristics. The economic growth of these two sectors has, however, not been the same. A wide
disparity exists between the per capita income and literacy rate, among other things, in these two sectors. From an
insurance perspective (both life and general insurance), statistics show that insurance in the rural sector is lower in
comparison to its urban counterpart. In the area of Life insurance, Life Insurance Corporation (LIC) has had a long
history of selling policies in the rural areas through its vast agent network. But as these policies are sold entirely by
the agent force, the focus on commissions to be earned restricts the profile of products sold to the high-valued,
savings-linked policies, which are not affordable for a majority of rural households. In the case of general
insurance, two types of products that are more recognizable in the rural context are crop insurance delivered by
public sector insurer General Insurance Company (GIC) and Livestock Insurance. The delivery of the above
products has been mainly restricted to beneficiaries of various Government-sponsored schemes and there has
been little active participation by the insurers to deliver these products on a larger scale. The public sector

Intl J Agri Crop Sci. Vol., 4 (15), 1033-1038, 2012

companies have also designed health insurance products like the Universal Health Insurance, but these policies
have really not been able to bring under their coverage sufficient number of people. To overcome the shortcomings
of the crop insurance product and livestock insurance, a couple of private insurance companies in partnership with
distribution channels have been piloting rainfall insurance. A major distribution channel that is being explored by
insurance companies is to tie up with Micro Finance Institutions (MFIs). With widespread illiteracy in the rural
community, a number of stumbling blocks have appeared. A study, carried out by Forte, a research agency in India
set up under the aegis of the Dutch insurance and banking group ING, has shown that the rural awareness level of
different types of insurance (on an unaided basis) is by far the highest for life insurance, followed by
automobile/farm machinery insurance and personal accident insurance. The study also showed the awareness
level to be the lowest in respect of insuring agricultural implements, followed by crop insurance and health
insurance. The urban segment in India is small as compared to the rural segment. Hence, exploring rural markets
poses to be a herculean task to the insurers. A major portion of the rural market has been uncovered although they
are also exposed to risks similar to or even higher than their urban counterparts. With a very high percentage of the
population, residing in rural India, which is plagued by high poverty levels and risk-bearing vagaries, rural
penetration, remains a daunting challenge to most insurers. The ratio of rural Indian population is very high and it
has grown insurance needs; therefore, it is a fact that the potential growth of insurance industry lies in the rural
market;
both
for
life
and
general
(non-life)
insurance.
Agriculture is the primary sector of Indian economy and agriculture along with the ancillary sectors like forestry,
horticulture, and fishing employs over 50% of the country's total population. Although in the GDP, the share of
agriculture is constantly falling, it still remains the largest economic sector and plays a major role in the socioeconomic development of India. In India the state governments are responsible for the output of agriculture, and
the financial policies are formulated by the central government. India is the largest producer of milk, cashew nuts,
coconuts, tea, ginger, turmeric and black pepper in the world.
Role of Agriculture in Indian economy at a glance
Agriculture in India got an impetus with the research work under the the Indian Agricultural Research
Institute (IARI) established in 1905. The central body in agriculture and its allied fields is the Indian Council of
Agricultural Research (ICAR). Agriculture comprises an important segment of the Indian budget passed every year.
According to the report of the union budget of 2007-08, in agriculture, farm credit was increased to Rs.125,309
crore in 2004, 000 crore in 2006-07 with addition of 50 lakh farmers. The
farmers to receive short-term credit at 7 per cent, with an upper limit of Rs.300,000, on the principal amount. The
National Agricultural Insurance Scheme will continue from the previous year. In the plantation sector of agriculture
a special purpose Tea Fund is to be setup, expected to be Rs.100 crore in 2006-07.
gandhian perspective on human security
A humane world where people can live in security and dignity, free from poverty and despair, is still a
dream for many and should be enjoyed by all. In such a world, every individual would be guaranteed freedom from
fear and freedom from want, with an equal opportunity to fully develop their human potential. Building human
security is essential to achieving this goal.
In essence, human security means freedom from pervasive threats of both violent and non-violent nature
to people's rights, their safety or even their lives. It is a condition or state of being characterized by freedom from
pervasive threats to people's rights, their safety, or even their lives. From a foreign policy perspective, human
security is perhaps best understood as a shift in perspective or orientation. It is an alternative way of seeing the
world, taking people as its point of reference, rather than focusing exclusively on the security of territory or
governments. Like other security concepts - national security, economic security, food security - it is about
protection. Human security entails taking preventive measures to reduce vulnerability and minimize risk, and taking
remedial action where prevention fails.
Human security has become both a new measure of global security and a new agenda for global action.
Safety is the hallmark of freedom from fear, while well-being is the target of freedom from want. Human security
and human development are thus two sides of the same coin, mutually reinforcing and leading to a conducive
environment for each other.
Why Human Security Now?
As argued by the Commission on Human Security (CHS), the need for a new paradigm of

Intl J Agri Crop Sci. Vol., 4 (15), 1033-1038, 2012

Security is associated with two sets of dynamics:


First, human security is needed in response to the complexity and the interrelatedness of both old and new
security threats from chronic and persistent poverty to ethnic violence, human Trafficking, climate change, health
pandemics, international terrorism, and sudden economic and financial downturns. Such threats tend to acquire
transnational dimensions and move beyond traditional notions of security that focus on external military
aggressions alone. Second, human security is required as a comprehensive approach that utilizes the wide range
of new opportunities to tackle such threats in an integrated manner. Human security threats cannot be tackled
through conventional mechanisms alone. Instead, they require a new consensus that acknowledges the linkages
and the interdependencies between developments, human rights and national security.
What is Human Security?
The CHS, in its final report Human Security Now, defines human security as: to protect the vital core of
all human lives in ways that enhance human freedoms and human fulfillment. Human security means protecting
fundamental freedoms freedoms that are the essence of life. It means protecting people from critical (severe) and
pervasive (widespread) threats and situations. It means using processes that build on peoples strengths and
aspirations. It means creating political, social, environmental, economic, military and cultural systems that together
give people the building blocks of survival, livelihood and dignity. CHS: 2003: 4). Overall, the definition proposed
by the CHS re-conceptualizes security in a fundamental way by:
(I) Moving away from traditional, state-centric conceptions of security that focused primarily on the safety of states
from military aggression, to one that concentrates on the security of the individuals, their protection and
empowerment;
(II) Drawing attention to a multitude of threats that cut across different aspects of human life
And thus highlighting the interface between security, development and human rights; and
(III) Promoting a new integrated, coordinated and people-centered approach to advancing peace, security and
development within and across nations.
What are the main features of Human Security?
Human security brings together the human elements of security, rights and development. As such, it is an
inter-disciplinary concept that displays the following characteristics:
people-centered
multi-sectoral
Comprehensive
context-specific
prevention-oriented
As a people-centered concept, human security places the individual at the centre of analysis.
Consequently, it considers a broad range of conditions, which threaten survival, livelihood and dignity, and
identifies the threshold below which human life is intolerably threatened. Human security is also based on a multisectoral understanding of insecurities. Therefore, human security entails a broadened understanding of threats and
includes causes of insecurity relating or instance to economic, food, health, environmental, personal, community
and political security.
Table 1.Different Type of Security
Type of Security
Economic security
Food security
Health security
Environmental security
Personal security
Community security
Political security

Examples of Main Threats


Persistent poverty, unemployment
Hunger, famine
Deadly infectious diseases, unsafe food, malnutrition, lack of access to basic health care
Environmental degradation, resource depletion, natural
disasters, pollution
Physical violence, crime, terrorism, domestic violence, child labor
Inter-ethnic, religious and other identity based tensions
Political repression, human rights abuses

Source: Handbook HS, United Nations, 2009

Moreover, human security emphasizes the interconnectedness of both threats and responses when
addressing these insecurities. That is, threats to human security are mutually reinforcing and interconnected in two

Intl J Agri Crop Sci. Vol., 4 (15), 1033-1038, 2012

ways. First, they are interlinked in a domino effect in the sense that each threat feeds on the other. For example,
violent conflicts can lead to deprivation and poverty, which in turn could lead to resource depletion, infectious
diseases, education deficits, etc. Second, threats within given country or area can spread to a wider region and
have negative externalities for regional and international security. This interdependence has important implications
for policy-making as it implies that human insecurities cannot be tackled in isolation through fragmented standalone responses. Instead, human security involves comprehensive approaches that stress the need for cooperative
and multicultural responses that bring together the agendas of those dealing with security, development and
human rights. With human security [as] the objective, there must be a stronger and more integrated response from
communities and states around the globe (CHS: 2003: 2). In addition, as a context-specific concept, human
security acknowledges that insecurities vary considerably across different settings and as such advances
contextualized solutions that are responsive to the particular situations they seek to address. Finally, in addressing
risks and root causes of insecurities, human security is prevention-oriented and introduces a dual focus on
protection and empowerment.
What Role Can Insurance Play in Economic Development?
Droughts, floods, and other natural disasters lead to severe income losses for rural people, especially
farmers and poor people.(3) Given their limited ability to offset these losses, many rural people suffer extreme
hardship, lose assets, and default on their debts in disaster years. The economic development literature
increasingly links poverty and shocks (e.g., Dercon, 2005). Studies find that a large portion of the poor in
developing countries are transitory moving in and out of poverty as they encounter shocks to household income.
These poverty traps justify some type of public intervention for equity and efficiency enhancement. As Dercon
(2005) concludes, social protection may well be good for growth. The prevalence of natural disasters is not new,
and farmers, rural institutions, and lenders have, over generations, developed ways of reducing and coping with
risk (e.g., crop diversification, farm fragmentation, kin support networks, storage, and asset accumulation).
Although the virtues of these traditional risk management instruments are widely recognized (see Walker and
!
"
#
n be costly in terms of the income
opportunities that rural people forego (e.g., crop diversification is typically less profitable than specialization).3 they
can also discourage investments and technological changes that, while risky, enhance long-term productivity
growth. Also, risk exposure can reduce access to credit because of greater risk of debt default in bad years. And
finally, shocks that accompany extreme events also create the poverty traps described above. Traditional risk
management methods have limited capacity to spread covariate risks, like droughts, that affect most people in a
region at the same time. In theory, these limitations would not exist if capital and insurance markets were perfect
and could pool risks over wider regions and over time, but the reality in many developing countries is quite the
opposite: relevant capital and insurance markets are poorly developed and weakly linked across regions and with
urban areas. Seminal works by Arrow (1964) and Debreu (1959) have addressed the value of risk sharing markets
for society. Failures in insurance markets provide a rationale for governmental intervention, but only if government
can fix the problem at a lower cost than the social benefits derived. Many governments have intervened with a
range of risk management programs for rural people (e.g., crop insurance, livestock feed subsidies and debt
forgiveness). Such programs have often been an expensive drain on the public purse, and there is little evidence to
show that these interventions have generated any sizeable social benefits or that the benefits exceed their costs
$% &
' % &
( "
)
Given these failings, many governments turn to various forms
of direct disaster assistance to relieve the problems of stricken areas. Such assistance is costly, and costs may
escalate in the future as more people live in vulnerable areas and as global climate change increases the
frequency and severity of many natural disasters. Moreover, once disaster assistance has been institutionalized
and taken for granted, it can lead to many of the same perverse incentive problems as an insurance subsidy,
inadvertently worsening future problems by encouraging people to increase their exposure to potential losses. For
example, assured compensation for flood or hurricane damage to homes can lead to the building of more houses in
flood and hurricane prone areas than prudent investors would otherwise build.4 Similarly, assured compensation
for crop losses in drought prone areas may encourage farmers to grow more of the compensated crops even when
they are more vulnerable to drought than alternative crops or land uses. More effective risk management
instruments are needed to enable rural people to better manage their own catastrophic risks. While some disaster
assistance should never be ruled out, new developments in insurance raise the possibility of substantially reducing
the financial burden on governments. (Hazell and seek, 2005).

Intl J Agri Crop Sci. Vol., 4 (15), 1033-1038, 2012

CONLUSION
Rural development is a part of economic development. Even economic development is a part of total
development and it cannot be equated with 'Total development of society'. The overall concept of development is
an interaction of 'Economic and non-economic forces'. The concept of economic development is not the
establishment of industries alone but is much more than the 'acquisition of industries'. It is the 'upward movement,
of the entire social system'. The concept of economic development is something much more than economic
growth. 'Development is taken to mean growth plus change'. Rural development is, therefore, not separate from the
concept of economic development and they cannot be termed as two different concepts.
The same parameters which are essential for the overall development of a society, which are implicit in the
concept of economic development are part and parcel of the process of rural development for those specific areas
and people who are living in rural environment.
Development for past two decades has also meant the capacity of a national economy, whose initial
economic condition has been more or less static for a long time, to generate and sustain an annual increase in the
gross national product at rates of perhaps 5 to 7 per cent or more. 14
Development during the seventies was redefined in terms of reduction or elimination of poverty, inequality,
and unemployment within the growing economy. Redistribution with growth became a common slogan.15 In fact,
development is considered as a process of social transformation from a traditional society to a modern society.16
Thus, rural development is a synonym of economic development and aims at the identical process of development,
which cannot be stopped and should not be stopped merely for the realisation of economic acquisitions alone.
It is a conscious, desired and designed effort to make available various facilities, techniques and
opportunities to the rural people to increase their capacity and efficiency - physically, mentally, technologically,
financially, politically, socially and economically right from nutrition, health, food, housing sanitation, and education.
The objective of rural development is to provide better working conditions to the rural population, create
employment facilities on farm and off the farm and related farm activities, increase production and productivity,
assure remunerative markets or support for their produce and products.
The economic stability of an entire rural area can be jeopardized by crises caused by different types of
natural disasters, from climatic events to livestock or plant diseases. Weather risks are a major source of
uncertainty for farms. Drought or excess rain is responsible for bad harvests all over the world. Besides, it seems
that the volatility of temperature and precipitation weather and the occurrence of extreme weather events increased
in the last decade and are likely to continue increasing due to global climate changes.(1) This leads to
destabilization of farm incomes in particular in countries with strong yield variability. Climatic risks are more
important for crops and sanitary risks are more important for livestock, but none of them are exclusive: pests can
have a considerable impact on crops and a bad climatology can make extensive damages on livestock farming
through the pastures or forage availability.
The economic situation of farms can be subject to strong variability due to other reasons:
Policy reforms, marked by trade agreements and market liberalization and the consequent reduction of prices
paid to farmers.
An unbalanced relationship between retailers, generally well organized, to put a strong pressure on prices and
farmers.
Sanitary measures and risk of animal diseases.
Producers can try to compensate the negative economic consequences of bad weather events by buying
insurance, but also, since the mid-nineties a new class of instruments, namely weather derivatives. Generally
speaking, weather derivatives are index based. Weather insurance are financial instruments that allow to trade
weather related risks. However, in Europe traditional crop insurances and calamities funds are the most used tools
to manage climatic risks. Some countries have decided to help the stabilization of their agriculture by supporting
the agricultural insurance schemes. . (2)
REFERENCES
hazell and seek. 2005. insuring against bad weather recent thinking 1sharma sk. (ed.), dynamics of development: an international perspective
(delhi : concept publishing company, 1978), vol. i, p. 2. and food safety: 65-74.
Arrow k j. 1964. the role of securities in the optimal allocation of risk bearing. review of economic studies 31: 91-96.
Bielza M, Conte C, Dittman C, Gallego J, Stroblmair J. 2006. agricultural insurance schemes. eur report in print.
Debreu G. 1959. theory of value: an axiomatic analysis of economic equilibrium. new york: wiley. economic risk analysis. 15th annual meeting of
the dutch society for veterinary and epidemiology

Intl J Agri Crop Sci. Vol., 4 (15), 1033-1038, 2012


European commission jrc ispra institute for the protection and security of citizens, human security in theory and practice application of the
human security concept and the united nations trust fund for human security. 2009.
Hazell Pbr. 1992. the appropriate role of agricultural insurance in developing countries. journal of international development 4: 567-581.
Hazell Pbr, Pomareda C, Valdes A. 1986. crop insurance for agricultural development: issues and experience. baltimore: the johns hopkins
university press.
Langeveld Jwa, Verhagen A, Van Asseldonk Mapm, Metselaar K. 2003. coping with increasing extremes in agriculture: an exploration for the
netherlands. world resource review, 15(4): 446-461.
Mourits Mcz. 2003. financing losses of infectious livestock diseases in europe: a potential role for insurance in managing catastrophic risks in
developing countries peter hazell ifpri. 2005
Todaro michael p. 1981. economic development in the third world (london: longman). p. 68.
Walker Ts, Ryan Jg. 1990. village and household economies in indias semi-arid tropics. baltimore: the johns hopkins university press.Walker Ts, Jodha Ns. 1986. how small farms adapt to risk. in p. hazell, c. pomareda and a. valdes (eds). crop insurance for agricultural
development: issues and experience. baltimore: the johns hopkins university press.

Das könnte Ihnen auch gefallen