New Delhi, Oct. 23 -- India's agriculture sector employs nearly half of its population and accounts for about 18% of the country's gross domestic product (GDP). It relies on smallholder farmers, representing around 86% of all farm holdings in India. These farmers and other vulnerable communities at the bottom of the economic pyramid suffer the most from increasingly erratic weather.

Recent news reports indicate that the Indian government plans to design a nationwide climate-linked insurance programme. This initiative of 'parametric insurance,' a form of coverage under which payouts are made if a specific event occurs rather than to compensate for actual losses suffered, arrives at a particularly crucial moment.

The government's decision...