The Centre is considering a plan to boost cash support to small farmers by a third, allowing the ruling party to shore up support from a key voting bloc ahead of elections.

The government is weighing options to raise the annual direct cash transfer to small farmers to Rs 8,000 ($96) from Rs 6,000, according to two officials familiar with the discussions, who asked not to be identified as the matter is still under consideration.

If approved, the plan would cost the government an extra Rs 20,000 crore, according to the people, on top of the Rs 60,000 crore budgeted for the programme in the current fiscal year through March 2024.  

Nanu Bhasin, a spokesperson for the Finance Ministry, declined to comment on the matter.

With 65 per cent of the country’s 1.4 billion people living in rural areas, farmers are a crucial voting bloc for Modi, who is seeking a rare third term in office in the upcoming election. Though he remains popular, with 55 per cent of voters viewing him as favourable, issues around rising inequality and joblessness may pose a challenge to him at the polls.

The government is trying to bolster farmers’ income after its inflation-control measures, such as a ban on some rice exports, curbed rural incomes. Besides, the weakest monsoon rains in five years threaten this year’s harvest of key crops. 

Since the subsidy programme kicked off in December 2018, the Centre has doled out 2.42 trillion rupees in total to 110 million beneficiaries. Officials are now discussing relaxing rules to include more farmers under the direct cash transfer programme, the people said. A final decision on these proposals have yet to be taken, they said.

Also read: Survey flags last-mile delivery issues with Direct Benefit Transfer 

The government is also taking other measures to support poorer households, such as extending a free grains programme into next year and considering subsidised loans for small urban housing. Last week, the Cabinet approved an increase in subsidies on liquefied petroleum gas, used for cooking.

More stories like this are available on bloomberg.com

Related Topics
comment COMMENT NOW