Modi govt weighs giving small farmers more cash ahead of LS polls in 2024

By Shruti Srivastava, Siddhartha Singh and Ruchi Bhatia
 

India’s government is considering a plan to boost cash support to small farmers by a third, allowing Prime Minister Narendra Modi’s 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 some 65 per cent of India’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 a popular leader, with 55 per cent of voters viewing him as favorable, 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. India has also recorded its weakest monsoon rains in five years, threatening this year’s harvests of key crops. 

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

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