Prime Minister Narendra Modi during the launch of ‘Kisan Samman Nidhi Yojna’, in Gorakhpur, on Feb. 24, 2019. (Photograph: PTI)

Modi, With Eye on Election, Begins Distributing Cash to Farmers

(Bloomberg) -- Indian Prime Minister Narendra Modi launched an income support program for small farmers in a bid to woo a key voter base ahead of the general election due by May.

The government started distributing the first installment of 2,000 rupees ($28) to farmers who hold as much as 2 hectares (4.9 acres) of land. Under the program, it proposes spending 200 billion rupees this fiscal year ending March and 750 billion rupees in the next.

“Our government is making efforts in all honesty to ensure farmers have all the required resources to help them double their income by 2022,” Modi said at a rally in the town of Gorakhpur in Uttar Pradesh, as funds were transferred to the accounts of more than 10 million farmers.

The populist move was first announced in the national budget earlier this month and comes just after the main opposition Congress party promised an income-guarantee program for the poor if voted back to power. It may help Modi in his re-election bid and ease the heat on his Bharatiya Janata Party, which lost control of three key states to Congress in December as the latter pledged to waive farmers’ loans.

According to the budget proposal, eligible farmers will get a total of 6,000 rupees every year in three equal installments. The program was effective Dec. 1, 2018 and will be funded by the federal government and benefit about 120 million small farmers.

The income support move comes as crop prices fall and fertilizer costs increase. Rural unemployment is rising, irrigation programs are inadequate and insuring against crop failure is a cumbersome process mired in red tape. As a result, farmers have increasingly turned to loans.

Thousands commit suicide every year due to crop failures and high debt. The latest government figures show farmer suicides surged 42 percent to about 8,000 in 2015, when some 4,600 agricultural laborers also took their own lives.

©2019 Bloomberg L.P.