India appeals to key rural areas in last Budget before election

India's Finance Minister Arun Jaitley (centre) leaving his office to present the federal budget in parliament in New Delhi on Feb 1, 2018. PHOTO: REUTERS

NEW DELHI (AFP) - India promised hundreds of billions of dollars to develop poor rural areas and to help struggling farmers in its annual budget on Thursday (Feb 1), looking to win over voters ahead of the next general election.

Finance Minister Arun Jaitley said the government would build new roads and toilets and bring electricity to millions of rural villages in his last full-year budget before national elections due by May 2019.

He pledged to spend US$220 billion (S$288 billion) on rural infrastructure and help farmers find alternatives to the post-harvest burning of crop stubble that every year blankets swathes of north India in choking smog.

"My government is committed to the welfare of the farmers," he said.

"We consider agriculture as an enterprise and want to help farmers to produce from the same land parcel at lesser cost, and simultaneously realise higher prices for their produce."

The majority of India's 1.25 billion population lives in the countryside, and winning rural voters is key to election victory in the world's largest democracy.

The government promised in the previous budget to double farmer incomes in the next five years and bring 10 million households out of poverty by 2019.

But many still live and work in near penury at the mercy of loan sharks and a harsh climate, and rural disaffection has stoked protests and a rise in farmer suicides in recent years.

Access to water is particularly problematic in India, where less than half of all agricultural land is irrigated, leaving farmers under the heel of the weather.

Jaitley promised to invest more money in irrigation schemes that use solar power to pump groundwater to the surface.

And he said the government would help some states subsidise machinery for farmers to destroy crop stubble to deter burning.

The burn-off in the northern farming states of Haryana and Punjab last year caused pollution across the region to spike at levels considered hazardous to health for weeks on end.

Jaitley told parliament the budget shortfall would be 3.5 per cent in the fiscal year 2017/8, higher than the target of 3.2 per cent.

He set next year's target at 3.3 per cent.

India's economic growth slumped to 5.7 per cent in the first quarter of the current financial year - the lowest in three years.

The government estimates the economy will bounce back to grow 7.2 to 7.5 per cent in the second half of the current fiscal year and has said the country is on track to achieve growth of eight percent "soon".

Jaitley also announced a national healthcare scheme for half a billion of India's poorest citizens in a major giveaway to voters.

He said India's most vulnerable families would be able to access up to 500,000 rupees (S$10,300) a year for hospital cover through the initiative.

India spends a little over one per cent of its GDP on public healthcare - one of the lowest proportions in the world - a sum the government is aiming to increase to 2.5 per cent by 2025.

The government currently provides 30,000 rupees towards healthcare for poor families, but that sum is insufficient to cover most medical procedures.

The programme would take public healthcare in the world's largest democracy "to a new aspiration level", said Jaitley.

"This will be the world's largest government-funded healthcare programme," he told parliament. "The government is steadily but surely progressing towards a goal of universal health coverage."

He said "adequate funds" would be provided to roll out the insurance program to 500 million of India's poorest nationwide.

Nearly US$190 million was earmarked to improve smaller local health centres accessed by many of the most vulnerable, he added.

India lacks sufficient doctors and state-run hospitals are stretched to breaking point.

Patients face long delays for even minor treatment, and a consultation with a private GP can cost 1,000 rupees (S$20) - a huge sum for millions living on less than US$2 (S$2.60) a day.

Jaitley said the government was "seriously concerned" that millions of Indians had to borrow or sell assets to receive adequate treatment in hospital.

India only has an estimated 840,000 medical doctors - one for every 1,674 people - far fewer than the one per 1,000 people recommended by the World Health Organisation.

Prime Minister Narendra Modi won a thumping mandate in 2014 promising, among other things, a universal healthcare plan to protect India's poorest.

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