India lost 33.9 million hectares of crops due to excess rains and an additional 35 million hectares due to drought between 2015 and 2021, a World Economic Forum (WEF) report has said.\u00a0\u00a0<\/p>\n
The impact of extreme climate events in India touches on nearly every aspect of its economy and society, but is more pronounced in particularly exposed sectors such as agriculture, which comprises 15\u00a0 per cent of India\u2019s GDP and employs around 40 per cent of its population \u2013 70 per cent among its rural households, it said.<\/p>\n
The report \u201cIncome Protection and Early Warning Systems: How India is Building Climate Resilience\u201d said India has seen unparalleled growth and development in recent decades. But it risks losing ground due to heightened exposure to climate perils including heat waves, floods and earthquakes.<\/p>\n
\nGrowing insurance gap
\n<\/h5>\n
Several Indian sectors including agriculture suffered $159 billion in economic losses in 2021 due to lost working hours from extreme climate impacts. \u201cBy 2030, India is projected to see a substantial 5.8 per cent decline in working hours \u2013 equivalent to 34 million full-time jobs \u2013 due to heat stress,\u201d it said.<\/p>\n
However, a growing insurance coverage gap is preventing many of these people from protecting their livelihoods from extreme weather events and climate change, said the WEF.<\/p>\n
Sandeep Katiyar, Co-Founder & CFO, Finhaat, said drastic climate change is affecting agriculture in several ways and there is a clear need to build in measures to increase the resilience of farmers to absorb these shocks.<\/p>\n
He said small and marginal farmers, who have landholdings of less than one hectare of land, make up 86 per cent of the 65 per cent of the population engaged in agriculture and allied activities.\u00a0\u00a0<\/p>\n
\nGovt leading way
\n<\/h5>\n
Katiyar said the Government is leading the way for innovations in this sector through policy intervention at the government level that includes the introduction of insurance not only for crop insurance but also weather-based products through Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weatber-based Crop Insurance Scheme (RWBCIS).<\/p>\n
The WEF report said the impact of extreme weather is disproportionate\u00a0 on the shoulders of low-income Indians. But the significant barriers in accessing adequate insurance cover have created a coverage gap.\u00a0<\/p>\n
\u201cInsurance companies and allied institutions working with this segment are creating path breaking weather-based insurance products that are relevant to specific geographies, industry sectors; and complement existing traditional insurance,\u201d said the Finhaat co-founder.\u00a0<\/p>\n
The report said government agencies and business leaders are working on several effective sector-specific local and national strategies to address the challenges.\u00a0<\/p>\n
\n\u2018Replicate initiatives\u2019
\n<\/h5>\n
\u201cThese initiatives could be replicated to help the vulnerable communities in other parts of the world,\u201d it said.\u00a0\u00a0<\/p>\n
The Sandbox for Agricultural and Rural Security, Technology and Insurance (SARATHI) can be pivotal in helping farmers to become more resilient while also shielding them from the volatility of climate change, the WEF report said.<\/p>\n
Recently, the government introduced the Women\u2019s Climate Shock insurance and Livelihoods initiative (WCS), which is first-of-its-kind income replacement product. This will prevent female outdoor workers from being forced to work during extreme heat waves. \u201cThis product is already being introduced to other at-risk communities in India and beyond,\u201d it said.<\/p>\n
India was the first country in South Asia to create a heat action plan after an extreme heat wave in the city of Ahmedabad in 2010 led to a 43 per cent increase in mortality compared with 2009. This is also helping the agriculture sector, it said.<\/p>\n
\nForum\u2019s caution
\n<\/h5>\n
Insurers could work more closely with policy-makers and government officials to use the industry\u2019s leading risk analytics, predictive tools and climate data to inform more heat action plans and direct capital towards high-impact adaptation interventions, the WEF report said.<\/p>\n
Katiyar said warehousing is another sector in focus for agriculture. \u201cCorporates are availing these products to mitigate risk of warehouse occupancy (eg. taking high rainfall cover in target geographies) to cover themselves as well. These measures will further help safeguard livelihoods and strengthen the agrarian economy,\u201d he said.<\/p>\n
The WEF report cautioned that if, as expected, 45 million people are forced to migrate from their homes by 2050 as a result of climate change, it would have \u201ccascading effects on local economies, for example by reducing tax revenues\u201d.<\/p>\n