The enormous dependency of crop production on weather highlights the pressing need for an effective mechanism to cope with weather-related production risks faced by farmers. This paper focuses on the recent developments in the weather insurance market and evaluates the performance of the Weather-based Crop Insurance Scheme in India. Through a micro-analysis of indemnity payouts under the traditional and the weather insurance schemes, the study reveals the much larger spread of benefits under the latter, thus significantly reducing a prominent drawback of the decades-old area yield scheme. While the product has tremendous potential to emerge as a sustainable crop insurance model that can meet the risk management needs of the rural poor, there are critical issues that merit action to achieve the desired results.
