In India, agriculture is the backbone of the economy, contributing to jobs either through salaried employment or entrepreneurship, in both the formal and informal economy. However, only 40% of the area under agriculture has access to irrigation facilities, while the rest of 60% continue to depend on the vagaries of the weather and be subjected to natural and climate disasters.

Approximately 69% of Indian women live in rural areas where projections show overall increases in temperatures, higher variability in rainfall with higher likelihood of intense rainfall. During the period 2003-2013, the agriculture sector has incurred 21.8% of total damage and loss due to natural disasters. In addition, droughts, floods and pest attacks hit during the months of June to September, which make incomes of agriculture dependent rural households insecure. There is evidence that rural women suffer more from climate related events than men do, as 75% of their income is agriculture dependent. Already in 2020, we are witnessing tremendous rainfall during the monsoon season, which has displaced livestock and livelihoods in a number of Indian States.

The ILO has been working to protect rural and agricultural households against these risks through insurance on projects which seek to build the capacities for both farmers and the farm workers for utilization and accessing benefits afforded by government supported schemes such as the Pradhan Mantri Fasal Bima Yojana (Prime Minister’s Crop Insurance Scheme PMFBY) as well through other private sector initiatives with NGOs and other service providers.

Working closely with the implementation partners and support of the Ford Foundation, the current project uses a variety of methodologies which assists to promote insurance strategies in rural development policies and programmes as part of a holistic approach to (agricultural) development and risk management. It also increases sustainable access to insurance that benefits rural populations. In addition, it creates awareness and builds knowledge for loss assessment and verification processes for improved understanding as well as acceptance of new services like insurance. Field work, outreach efforts and contacts with farmers have helped in communication of the insurance message to over 150,000 farmers and farm households and enrolment of more than 25,000 farmers in the PMFBY scheme. Knowledge-sharing workshops have been organised to help partners learn from each other as well as recognise success factors and opportunities for improvement.

The project aims to increase the resilience, strengthen the capacity to manage risks, and improve the livelihoods of agricultural and rural workers, households and small enterprises, whose incomes depend on agriculture and other farm (and off-farm) activities. This objective links well with the ILO’s efforts in this area. In the case of agricultural insurance, it gives incentives to increase investment in their farms to grow crops with higher value and be protected against any natural disasters.

From the ILO’s perspective, the project can help in strengthening social security and promoting the creation of productive employment through better access to insurance and financial services. We also pay special attention to overcoming the obstacles faced by women farm workers in rural areas in accessing land, finance and other services.

It thus promotes decent work in the rural economy, promotes sustainability of enterprises and assists in the formalization of the informal economy through provision of financial services. These align well with the United Nations’ Sustainable Development Goals, in particular SDG 5, 8, 10, 11, 13 and, of course, 17. The project creates the base for further work among our organizations on issues related to natural resources and climate change, gender equality, working with diverse government ministries to make a difference in the lives of communities through developing the combination of knowledge, skills and values which will potentially promote quality of life in communities.

Nevertheless, despite the government’s subsidy and strong push for voluntary enrolments in these programmes, there are still gaps in operation. It can take a long time for businesses, livelihoods, incomes and productive assets to recover from the impact of natural disasters. In order to protect businesses and women in the rural sector, they need to be assisted in adopting financial solutions that reduce and adapt their heavy dependence on the agriculture sector as their main source of income.

In trying to find a solution to this problem, the ILO and IFAD recently worked closely with the Indian Self-Employed Women’s Association (SEWA), a national women’s union working with 1.5 million female members in 14 states in India. Together, we have developed a joint proposal to establish an integrated financing framework for rural communities. The innovative financing mechanism in livelihood recovery includes a couple of financial products: a livelihood recovery fund, weather-based crop insurance, micro-business insurance, and a moratorium of one month on debt recovery and a waiver of interest on loans in distress hotspots and during calamities until communities can start repaying.

This financial intervention strives to provide cash flow support to women-led rural enterprises impacted by climate shocks or disasters. It also prevents a debt trap with moneylenders or other informal credit sources and it allows women to be able to hedge risks associated with unfortunate climate related events. These interventions together also assist women in informal farming.

The goal of the livelihood recovery fund is to help women develop the power of collective bargaining, create additional alternative livelihoods for their families and attain social protection, work income and access to finance and food security. The fund is now being discussed with a number of potential donors and if launched can change the lives of women farmers significantly. In addition, colleagues of Social Finance have worked with SEWA in conducting sessions to promote the use of financial services among members.

- Written by Kelvin Sergeant, Specialist in Small Enterprise Development and Job Creation (ILO New Delhi office).