A farmer in rural India shows off the insurance tag on his cow Big Rose.
It would be sad for farmer S. Debarasu if Big Rose, his prized milking cow, was hit by a car or crushed in a cyclone. But thanks to a $14-a-month insurance policy, it would no longer be a financial disaster.
Debarasu’s new cow-insurance coverage represents a significant step forward in India’s hopes to lift hundreds of millions of people into prosperity. Insurance for cattle, chickens, tractors, trucks and lives is suddenly appearing in India’s vast rural areas, an important new indicator of the spread of middle-class stability in this nation of 1.2 billion people.
As India’s economy continues to click along at 7 percent growth, prosperity has spread beyond New Delhi and Mumbai and into the rural villages where a majority of Indians still live. Farmers who find themselves with a little disposable income are turning to insurance — a once-unthinkable luxury that allows them to secure their gains, plan with confidence and feel something that earlier generations could never imagine: hope in the future.
“My standard of living is much better than my father ever dreamed,” said Debarasu, standing near the cattle pen outside his comfortable three-bedroom house, which looks out over four acres of rice paddies in this southern Indian village.
As he spoke, his eldest daughter rushed out of a taxi with her college applications in her arms. “My daughter will be the first generation to go to college,” he said. “Earlier, we didn’t even think that was possible. We never talked about insurance or universities.”
Debarasu, who wore a traditional lungi wrap under his Western polo shirt, is emblematic of rural India’s increasing access to modern financial services: insurance, credit and banking.
For his parents’ generation, saving money meant shoving a few thousand rumpled rupees into a rusted can. But in 2006, Debarasu opened his first account at a new bank in town. Three months ago he insured four cows; one month ago he insured his brand-new tractor; and 15 days ago he bought personal accident insurance.
In addition to providing a measure of security, insurance has been an economic catalyst that has allowed farmers such as Debarasu to invest more boldly in new livestock or equipment, without the fear that a single storm or accident could wipe them out.
As the world struggles to recover from economic recession, India has the second fastest-booming economy after China. Economists say much of the growth is unfolding in emerging consumer markets outside the traditional urban centers.
K.G. Krishnamoorthy Rao, chief executive of Future Generali India Insurance, said the Mumbai-based company insured 40,000 cattle last year alone. It is now canvassing three more states. Future Generali and other private insurance companies often partner with nongovernmental groups to reach out to farmers. The groups also monitor the insurance companies to avoid scams.
“Rural India is our new and exciting frontier for major growth,” Rao said. “We are insuring tractors, water pumps, even poultry. It’s a great sign of how healthy the economy is becoming in many villages.”
The Indian government opened up insurance to private firms about a decade ago. In the past few years, more than 15 private companies started fanning out to farmers and day laborers, offering low-cost “microinsurance” packages to the upwardly mobile Hindu hinterland.
Up and down the narrow roads here, billboards tap into small-town and rural dreams. They advertise farmer insurance packages, as well as goods and services: small washing machines, scooters, dental work, cellphones, and satellite television with “21 Tamil TV stations.”
“Rural communities buying insurance and moving into the consumer classes is proof of the growing aspirations, awareness, and trust in the future in today’s India. Many are no longer as fatalistic,” said Paranjoy Guha Thakurta, an economist. “That middle-class Indian dream has captured the countryside’s imagination.”
Prosperity in rural India has been helped by growing demand and higher prices for rice, wheat and other produce grown in farming areas. But it is also motivated by politics.
Prime Minister Manmohan Singh’s Congress party government has pushed what officials call “inclusive growth” to help the rural poor. It’s a pragmatic philosophy in a country where the poor and working classes always vote and the disillusioned elite often stay home.
The government has forgiven loans and offered extended payment deadlines and lower interest rates in areas with weak or late rains, measures that helped improve the flow of cash in local economies.
Congress requires those who participate in certain government benefit programs to open bank accounts. Most notable is the vast National Rural Employment Guarantee Act, which offers low-income Indians 100 days of guaranteed work and is expected to benefit almost 45 million households this year.
Wages in that program are disbursed directly into bank and post office accounts. The idea is to eliminate opportunities for corruption, but it has had the effect of giving millions of poor people their first access to a savings account.
“The beauty of this country right now is how consumption is being driven by the rural areas,” said Uday Shankar, chief executive of Star India, a group of entertainment and news channels, which is reaching out to rural India. “Rural consumption even cushioned the blow during the global economic crisis.”
Here in India’s southern state of Tamil Nadu, the billboards for new products are joined by a changing landscape. Along with seed stores and farm-equipment repair shops, there are now engineering colleges and computer training centers, all signs of an India undergoing an enormous economic shift from farming to skilled labor.
Take the Thangaraj family, sugar cane and rice farmers who live in a rural hamlet called Anandapuram, a name that translates in Tamil to “happy place.” They recently bought a new tractor and a “farmer insurance package” from Royal Sundaram Alliance Insurance Co.
Sitting on his front porch amid the construction of his soon-to-be-expanded home, Anbalagan Thangaraj, 38, said he needed the tractor because many of his manual laborers left for better-paid construction jobs in the city.
“Earlier, no one was bothered to think of insurance. It would be a waste of money, and we would leave life to the weather and the fates,” said Thangaraj, who had a Montblanc pen tucked in his shirt pocket, a gift from his brother, a high-paid engineer at a Mercedes-Benz showroom in northern India. “Now if something happens, we have a backup plan.”
One day last week, he proudly showed off his tractor by taking his two children and his insurance broker to watch as it got a new paint job. Along the way, Thangaraj asked the agent about his buzzing BlackBerry.
“I want one of those for my kids, one day. But do you have insurance for that?” Thangaraj asked, laughing as he looked curiously at the small keypad. “Might be a good idea.”
Via Washington Post