NEW DELHI - With an eye on wooing voters ahead of what is expected to be a tough national election, India's Hindu nationalist government announced cash handouts of billions of dollars for poor farmers.
In the annual budget presented in parliament Friday, interim Finance Minister Piyush Goyal said 120 million farmers with less than two hectares of land would get an income of $85 a year.
Goyal announced that the measure, which will cost about $10.5 billion, would be implemented with immediate effect. "This will pave the way for them to earn a respectable living," he said. "Such support will help them avoid indebtedness."
Farmers complain that a sharp decline in crop prices has hurt their incomes and driven millions into debt. Rural experts said they were not sure whether the measure will assuage disgruntled rural communities that have been demanding loan waivers and better prices for their produce.
The government also announced a pension scheme of about $40 a month for nearly 100 million poor workers in the country's vast unorganized sector and tax breaks for the middle classes.
The welfare measures come as Prime Minister Narendra Modi's party tries to address rising discontent in the country — there is growing anger in rural areas over falling crop prices and widespread worries that his government has failed to create jobs to meet the needs of the country's huge young population.
The Bharatiya Janata Party recently lost elections in three heartland states, raising concerns it could struggle to win a majority in the upcoming elections. Modi had sailed to power in 2014 on the promise of creating millions of jobs.
Although economic growth numbers have been good, lack of jobs has emerged as the biggest challenge for Modi. A report in the Business Standard newspaper says a government survey that has not been released pegs the unemployment rate at a 45-year high of 6.1 percent.
Expressing optimism that "India is solidly back on track and marching towards growth and prosperity," Goyal said that infrastructure projects such as building roads in rural areas will boost employment.
The opposition Congress Party slammed the income support of $85 a year announced for farmers as inadequate. Saying that it is not going to be transformational, senior party leader Shashi Tharoor tweeted, "?6000 [6,000 rupees, or $84] in income support for farmers boils down to ?500 [500 rupees, or $7] per month. Is that supposed to enable them to live with the honor and dignity?"
The Congress Party is also trying to woo voters with the promise of a minimum income for the poor if it wins the upcoming general election. The BJP has dismissed the pledge as unaffordable, while economists have expressed concern that the "competitive populism" by India's two main parties ahead of general elections could strain the country's finances.
The government said the fiscal deficit this year will rise from 3.3 percent to 3.4 percent due to the outlay for the income scheme for farmers.