Financial Inclusion in the Global South: An Analysis of Index-Based Agricultural Insurance and Farmer Food Security in India

Abstract

Index-based agricultural insurance (IBAI) is presented by several development organizations as a highly effective way of mitigating climate change related risks and improving farmer food security. However, critics doubt the effectiveness of the instrument and regard it as a new frontier for capital accumulation. Linking to this debate, this research uses a qualitative design to investigate how IBAI affects the food production and consumption of farmers in the Indian state of Karnataka. It finds that the proposed benefits of the instrument are overestimated. Most of the major issues reported by farmers cannot be addressed by insurance. Moreover, using the alternative concept of food sovereignty, the research suggests that several problems reported by interviewees, such as unstable market prices, unequal land distribution and missing irrigation require political action rather than financial inclusion.