What is moral hazard in agriculture?

Moral hazard refers to the effect insurance. contracts may have on the insured’s hidden actions. When bad outcomes are. indemnified, the insured may have less incentive to prevent these outcomes.

How does agriculture affect the Indian economy?

Agriculture plays a vital role in the Indian economy. Over 70 per cent of the rural households depend on agriculture. Agriculture is an important sector of Indian economy as it contributes about 17\% to the total GDP and provides employment to over 60\% of the population.

What are the reasons for crisis in Indian agriculture?

Investment in agriculture and its allied sectors, including irrigation, transport, communication, rural market, rural infrastructure and farm research, should be drastically increased, and the government should aim at integrated development of the rural areas.

What is MSP system in agriculture?

Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices. MSP is price fixed by Government of India to protect the producer – farmers – against excessive fall in price during bumper production years.

Why is agriculture important for economy?

Agriculture plays a crucial role in the economy of developing countries, and provides the main source of food, income and employment to their rural populations. However, improvements in agriculture and land use are fundamental to achieving food security, poverty alleviation and overall sustainable development.

Why is moral hazard is an economic problem?

Why Is Moral Hazard an Economic Problem? Moral hazard is an economic problem because it leads to an inefficient allocation of resources. It does so because one party is creating a larger cost on another party, which would result in significantly high costs to an economy if done on a macro scale.