responsible for developing some of these public goods relating to the market infrastructure for agricultural insurance in India, for example by piloting and scaling up improvements in crop cutting experiments and conducting analysis and research leading to best practice guidelines on areas such as product design, procurement and strategies for increasing take-up.

The international community, practitioners and academics, can learn a lot from the Indian experience. Whilst some of the lessons from this project are specific to agriculture insurance in India, others are applicable more generally. First, provision of a cost effective agricultural insurance program requires long term investments in data and capacity beyond the horizon of the private sector. The Government of India has provided widespread agricultural insurance, albeit mostly on a social basis, since the launch of the Comprehensive Crop Insurance Scheme in 1985, and has continued to invest heavily in institutional capacity building and technical inputs. Second, technical tools are necessary to help guide policy dialogue, and these tools should reflect on-the-ground realities and political and economic considerations even if this means that the solutions are technically second best. Third, although much recent work has focused on either weather or area yield indexed insurance, it is possible to design products which combine the strengths of both, such as the pilot mNAIS product. Finally, political economy dimensions cannot be underestimated when it comes to implementation. Reforms of the scale of the mNAIS require significant political momentum from different ministries, most notably the Ministries of Agriculture and Finance, and an enabling policy climate.

# **Bibliography**

**AICI** , 1999. “National Agricultural Insurance Scheme: Scheme & Guidelines” New Delhi: Agriculture Insurance Company of India

**AICI** , 2010. “A Discussion note for Actuarial Design and Ratemaking” New Delhi: Agriculture Insurance Company of India

**Binswanger-Mkhize, H.** , 2011. _“Is there too much hype about index-based agricultural insurance?,”_ mimeo.

**Carter, M.R., F. Galarza, and S. Boucher** , 2007. _Underwriting area-based yield insurance to crowd-in credit supply and demand_ , Giannini Foundation of Agricultural Economics working paper, UC Davis 07-003.

**Clarke, D.J.** , 2011. _“A Theory of Rational Demand for Index Insurance”_ , Economics Series Working Papers 572, University of Oxford, Department of Economics.

**Clarke, D.J., O. Mahul and N. Verma, 2011a.** _“Index Based Crop Insurance Product Design and Ratemaking: The case of the modified NAIS in India,”_ World Bank, mimeo.

**Clarke, D.J., O. Mahul and N. Verma, 2011b.** _“Weather Based Crop Insurance in India,”_ World Bank, mimeo.

**Cole, Shawn A., Xavier Giné, Jeremy B. Tobacman, Petia B. Topalova, Robert M. Townsend, and James I. Vickery** , 2009. _“Barriers to Household Risk Management: Evidence from India,"_ Working Paper 09-116, Harvard Business School.

**Collins, D., J. Morduch, S. Rutherford, and O. Ruthven** , Portfolios of the Poor: How the World’s Poor Live on $2 a Day, Princeton University Press, 2009.

**Dercon, S.** , 2004. “ _Risk, insurance, and poverty: a review,"_ in S. Dercon, ed., Insurance against Poverty, chapter 1.

19