Essay --

Introduction As seen above, a large number of people live below poverty line and over one-half of these people depend on agriculture. These rural households may not be directly involved in the agricultural labor but their income sources are linked with the success of the agricultural production. They may be exposed to the financial risks following natural disasters or climate change, which affect the products of agriculture. 1. Agriculture in India and Major Risks 1.1. A review of Agriculture in India This section covers the significant government policies that aimed at the promotion of agricultural development. There were many principle changes that have been introduced since the Independence of India. At the time of Independence, the agricultural sector consisted of a stagnant backward economy with low resource availability, inadequate government support and most importantly, severe poverty. Daniel Thorner, a well-known economist remarked â€Å"India was left with perhaps the world’s most refractory problem† (ANTHONY P. D'COSTA). Land reforms were introduced as an immediate measure to deal with the skewed distribution of land and the reforms led to the abolition of intermediaries and giving land titles to farmers. Along with these reforms, the Community Development Programme was set up in 1952 (NAYAR, 1960). This programme aimed at the development of the rural people by the co-ordination of the activities related to agriculture, animal husbandry and irrigation, which was executed and evaluated by officials at district level to village level. National Extension Service was also introduced along with the Community Development Programme, which also aimed at the initiati on of rural development activities under the sponsorship of the ... ... their chances of default either by borrowing money from lenders at atrocious interest rates or by selling their assets alongside poor investment in future seasons. Therefore, yield risk is one of the most important agricultural risks. Rainfall is a major yield risk factor especially in the Indian economy, as it is heavily dependent on monsoon. A recent study has shown that there is a positive correlation between rainfall and the crop yields in rural India (Kirtti Ranjan Paltasingh, 2012). Hence, the risk is more dominant in certain regions such as arid regions when compared to high rain-fed regions. High temperature also affects plant growth and decreases the yield significantly. 1.2.2 Market/Price risk: Agriculture is subjected to many uncertainties and this even includes the price of the agricultural products. The input and output prices are volatile in nature.