Eye on LS polls? Centre mulling cash handouts to farmers instead of subsidies

The plan for the handout comes after the ruling Bharatiya Janata Party was voted out in key state elections last month, forcing Modi to draw up a course correction before Lok Sabha polls due by May.

Published: 21st January 2019 01:45 PM  |   Last Updated: 21st January 2019 01:56 PM   |  A+A-

farmers, farm subsidy

The additional cost will be limited to 700 billion rupees annually. (Photo | EPS)

By Bloomberg

Centre is considering a plan to transfer cash to farmers instead of offering subsidies on various agricultural inputs, sources said.

Prime Minister Narendra Modi’s government is planning to club all farm subsidies including fertilizer costs and instead pay farmers cash, the people said asking not to be identified as the discussions aren’t public. The additional cost will be limited to 700 billion rupees annually, the people said. Finance Minister Arun Jaitley had budgeted 701 billion rupees for farm subsidies in year ending March 31. Finance ministry spokesman D.S. Malik didn’t respond to two calls made to his mobile phone.

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

The additional spending won’t impact the nation’s fiscal deficit for the current year ending March 31, the people said.

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