Modi Government to Provide Subsidies Worth 200 Billion Rupees to Small Farmers

The Indian government is providing a fresh allotment of subsidies to small farmers, a move that could woo the farmer community”s support ahead of the upcoming elections, according to a report by Bloomberg.

The government is considering options to increase the annual direct cash transfer to small farmers to ₹8,000 ($96) from ₹6,000, the report said. The outlay of the project is ₹200 billion, which is in addition to the budgeted amount of ₹600 billion previously earmarked for this purpose in the current fiscal year (FY 2024).

The Finance Ministry has not made any official responses in this regard.

With this move, the Narendra Modi government, which is competing for a third term in the coming elections, is trying to attract the rural vote, which represents 65% of India”s 1.4 billion people, the report said. Even as Modi remains a popular leader with 55% of voters” support, there are some headwinds such as inequality and unemployment posing challenges to him.

The government had taken some supply-side measures to curb inflation such as banning rice exports and imposing import duty on some goods. The new decision to bolster farmers” income is coming in the wake of these moves. The Modi government has already distributed about ₹2.42 trillion to 110 million beneficiaries since December 2018 as part of the subsidy program.

According to anonymous sources, officials are currently in talks to ease the regulations of the direct cash transfer program to include more farmers. However, no final decision has been made yet, reported Bloomberg.

In addition, the government is taking other steps to support underprivileged households. For instance, they are extending the free grains program into next year and considering offering subsidized loans for small urban housing. The cabinet also recently approved an increase in subsidies on liquefied petroleum gas (LPG), which is used for cooking.