Protecting farmers from crop loss related income shocks and eliminating extreme poverty are important development priorities of this century. India has made significant progress in protecting farmers from income loss due to drought and other calamities through various crop insurance schemes. At the same time, poverty rate has also been declining and Andhra Pradesh (AP) has been among the states with lowest poverty rates. Making further dent on poverty reduction in sustainable manner remains a challenge.

This paper analyses the evidence on the necessity of subsidies for increasing uptake of crop insurance, and its potential impacts on farmers’ risk-taking ability and health benefit and second a graduation model that provides a potential avenue of expanding social protection for ultra-poor.