Insurance and risk management in rural areas

Project description

Title: Risk reduction through rural insurance services
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: India
Lead executing agency: Ministry of Finance, Department of Financial Services, Insurance Division
Overall term: 2013 to 2016

India. Smallholder farmers market their products cooperativel © GIZ


Some 82% of India’s 168 million rural households depend for their livelihoods on agriculture. For the 117 million poorer households with small landholdings it is particularly difficult to cope with any financial losses they incur if such risks materialise as poor harvests or a fall in the market prices for their agricultural produce. Forward-thinking risk management and insurance products can help to reduce these losses and increase economic security. However, the majority of rural households and small-scale farmers do not have access to adequate insurance products or other services to reduce their risks and enable them to market their produce profitably.


Rural households and smallholder farmers in India enjoy improved access to agricultural and insurance services.

India. Crop losses due to drought © GIZ


The programme collaborates with the state-owned Agricultural Insurance Company of India and the National Bank for Agriculture and Rural Development (NABARD). These two organisations are the most important development instruments of the Indian Government in their respective fields and have considerable funds at their disposal. They also provide a channel through which the programme can cooperate with India’s federal states. The states play a crucial role in the implementation of agricultural insurance and development programmes.

The project advises its partner organisations and provides further training for their employees. The partners collaborate with the insurance industry, agri-businesses and agricultural producer organisations in developing replicable integrated risk management approaches. Furthermore, to support exchanges of experience, innovation and good practice, the programme cooperates with the Insurance Regulatory and Development Authority of India and with the German insurance industry.


In cooperation with the Agriculture Insurance Company of India, the programme has introduced an innovative insurance product for mango and grape growers. This product combines the strengths of traditional indemnity-based schemes with those of weather-index insurance products. The Karnataka State Department of Agriculture has committed funds to enable farmers to use the product to insure their yields on an area of 1,000 hectares.

India. A damaged maize crop © GIZ

In the state of Gujarat, the programme established a network for the dissemination of knowledge related to safe and sustainable agricultural production, as well as marketing and risk management. This gave rise to new marketing channels through which smallholder farmers have been able to sell 2,000 tonnes of mango directly to consumers.

The programme has entered into cooperation with the Maharashtra State Agricultural Marketing Board to promote business links between farmer producer organisations and corporate buyers of agricultural produce. For this purpose it is intended to use existing models of partnership between the public and private sector.

Additional information