With the loss in Key- State Assembly elections 2018 last month, Modi’s Government is all set for a correction course ahead of Vidhan Sabha Elections. The government is weighing options including a monthly income support program, a cash handout plan for the shortfall between the actual sale price and state-set procurement rate and a revamped crop insurance program in order to impress the disappointed farmers, a key bloc that influenced the election results in Assembly Elections. The final program could be one of these or a combination of all three.
In July, the government raised support prices of crops such as cotton, soybeans and paddy rice to ensure farmers get at least 50 percent more than the estimated production costs. While that has largely failed to shield farmers from distress sales due to lack of sufficient state procurement, the government now plans to pay cash to farmers if their produce sells at a discount to the government-set rates.
Another alternative being considered is a revamp of the crop insurance program. The changes could include a reduction in premium paid by farmers, inclusion of more crops to avail state incentives and bringing tenant farmers under the cover. Modi, who is seeking a second term, has to win over farmers before the election. They have been hit by falling crop prices and rising input costs, forcing them to hit the streets seeking debt waivers and protection from distress sales. Add to it, the pressure from opposition Indian National Congress which waived off farm loans after wresting power from the BJP in three states earlier this month.
The income support program could help reduce poverty in a country that’s home to a third of the world’s poor and still spends less than 2 per cent of its gross domestic product on social security.
With the government already exceeding its budgeted annual deficit in October, any sops will need to be balanced with possible reductions in spending to achieve the fiscal gap target of 3.3 per cent of gross domestic product.