Though it is not yet final and ready for public announcement, but an insider reveals the Narendra Modi-led government is planning to transfer cash to farmers instead of subsidies. The fund will club all farm subsidies including fertilizer costs.
Following losing three key state elections lately the Bharatiya Janata Party (BJP) has worked out such plan to draw up a course correction before the Lok Sabha elections. It will cost the government an additional $70,000 crore annually.
The source said additional spending will not impact to India’s fiscal deficit in current financial year as. In current year Finance Minister Arun Jaitley budgeted $70,100 crore for farm subsidies.
Modi is seeking second term and so he has to win over discontented farmers in the election. Opposition Congress has waived off farm loans in the three states where it has won. Hence the pressure to waive in other states is mounting on BJP.
Investors meanwhile are keeping an eye on the government to know from where the additional funds for the farmers to come from.
S&P Global Ratings credit analyst Andrew Wood said, “It is not unusual to observe socially supportive fiscal measures being introduced at this point in the election cycle.”
Very recently FM Arun Jaitley said the missing budget goal is not an worry and things entirely depends on what the existing situations are.
Jaitley added, “Therefore without getting into specifics, because that will be disclosing the mind into which we are working, some of those challenges really can’t afford to wait and therefore obviously there will be a necessity to address them.”
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