PM Modi plans cash handout for Indian farmers before 2019 Polls

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Prime Minister Narendra Modi is studying three options for farmers
Prime Minister Narendra Modi is studying three options for farmers

New Delhi : In an attempt to digitize India, Prime Minister Narendra Modi is planning a cash handout for farmers. While Modi is studying options, a few people from his administration aim to ease an agrarian distress and shore up popular support for the upcoming general election in 2019.

The BJP-led government is weighing options including a monthly income support programme for farmers, a cash handout plan for the shortfall between the actual sale price and state-set procurement rate and a revamped crop insurance programme, people familiar with the matter said, asking not to be identified as they aren't authorised to speak to the media. The final program could be one of these or a combination of all three.

The plan for cash handout came soon after the ruling Bharatiya Janata Party was voted out in key state elections this month, forcing PM Modi to draw up a course correction before national polls due by May. The government, which has already exceeded the annual budget gap aim, has little space for spending in the current year, having forgone some tax revenue on goods and services following the defeat.

The income support programme involves a certain amount as monthly payout to farmers and could benefit as many as 150 million farm households, a key bloc that can influence the election outcome.

Earlier in July 2018, the government raised support prices of crops such as cotton, soybeans and paddy rice to ensure farmers get at least 50 per cent more than the estimated production costs. While that has largely failed to shield farmers from distress sales due to lack of sufficient state procurement, the government now plans to pay cash to farmers if their produce sells at a discount to the government-set rates.

Another option considered is a revamp of the crop insurance programme. The changes could include a reduction in premium paid by farmers, inclusion of more crops to avail state incentives and bringing tenant farmers under the cover.

Conversely, the Finance ministry spokesman DS Malik didn't respond to two calls made to his mobile phone. An agriculture ministry spokeswoman declined to comment.

Sources confirmed that with the Modi government already exceeding its budgeted annual deficit in October, any offer will need to be balanced with possible reductions in spending to achieve the fiscal gap target of 3.3 per cent of gross domestic product.