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Modi's Plan for Indian Farmers Is ‘Wild Card’ in Polls, UBS Says

The scheme remains a wild card that, if implemented and marketed well, could influence voting behavior, UBS says.

Modi's Plan for Indian Farmers Is ‘Wild Card’ in Polls, UBS Says
Narendra Modi, India’s prime minister, center, waves during the Republic Day parade in New Delhi, India. (Photographer: T.Narayan/Bloomberg)

(Bloomberg) -- An assured income for India’s 120 million small farmers may help sway rural voters, helping Prime Minister Narendra Modi’s party staring at a close contest at elections this spring, according to UBS Securities India Pvt.

“The scheme remains a wild card that, if implemented and marketed well, could influence voting behavior,” analysts led by Gautam Chhaochharia wrote in a Feb. 16 report after meetings with leaders and policymakers in New Delhi and Uttar Pradesh, a swing state that the Bharatiya Janata Party won in 2014.

The government’s Feb. 1 budget contained $13 billion of measures including an annual 6,000-rupee payout to marginal farmers. The policy may reap dividends because it involves an yearly rather than a one-off payment, with the first installment likely due in the next few weeks, the analysts wrote.

The income support “is a guaranteed cash flow that farmers can use as a collateral to take out loans from banks -- it can be levered 3-4 times,” they said. “It also reduces the tail part of the volatility and we think farmers will likely respond to it positively.”

READ: UBS Votes for Private Banks, Rural Firms in India Election Picks

To contact the reporter on this story: Nupur Acharya in Mumbai at nacharya7@bloomberg.net

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Ravil Shirodkar

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