Narendra Modi, India’s prime minister, center, waves during the Republic Day parade in New Delhi, India. (Photographer: T.Narayan/Bloomberg)

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

(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

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