This study evaluates the NAIS scheme in terms of coverage, pay-outs and other relevant outcomes to understand the causal linkages between insured lending portfolios and agricultural credit flows.
Even though farming is the primary economic activity for a large majority of the world’s poor, lending to long-cycle agriculture is inhibited by concerns of crop failure. In India, the National Agricultural Insurance Scheme (NAIS) and its predecessor, the Comprehensive Crop Insurance Scheme (CCIS) are natural experiments to understand whether insuring agricultural credit portfolios result in lenders expanding agricultural credit. Agricultural loans are required to be insured under these schemes and therefore banks and farmers are protected against defaults on agricultural loans. This suggests that suppliers should hence be more willing to lend credit, and farmers more willing to demand credit and thereby increase investments in agricultural productivity. This project aims to evaluate the NAIS scheme in terms of coverage, pay-outs and other relevant outcomes, and understand the causal linkages between insured lending portfolios and agricultural credit flows.