Determinants of Adoption of Crop Insurance: Evidence from Bolangir District in Odisha

Abstract

Pradhan Mantri Fasal Bima Yojana (PMFBY) is an area-based crop yield insurance scheme introduced in Odisha in Eastern India since kharif, 2016. The present study aims to identify the factors that determine the adoption of PMFBY among farmers and examine the operational efficiency of the scheme. The study is based on a field survey conducted in the drought-prone Bolangir district in Western Odisha. A total of 200 households were interviewed with questionnaires, which included 80 loanee and 80 non-loanee PMFBY users and 40 non-users. Probit regression is fitted to identify the factors that determine the adoption of PMFBY. Higher caste farmers with greater farm size, larger household incomes and indebtedness and risk-averse farmers are more likely to adopt PMFBY. Farmers having more dependence on non-farm income are less inclined to buy crop insurance. Farmers cite various reasons for dissatisfaction with the scheme such as: delay in compensation payment, large loss assessment unit and non-coverage of individual and independent risks.