Indian PM Modi does a course correction as he reaches out to farmers and the poor in Budget

Rural India accounts for nearly 70 per cent of the population. PHOTO: BLOOMBERG

NEW DELHI - Indian Prime Minister Narendra Modi has announced an aggressive reachout to farmers and the poor in the new Budget, but analysts say it remains to be seen if this course correction will work.

They say it hinges on whether the government will be able to implement the schemes. It also needs to do more to alleviate the agrarian crisis in India.

In the new Budget, a key promise is a health insurance scheme covering 100 million poor families, with an allocation of 500,000 rupees (S$10,230) for every individual.

A total of 14.34 trillion rupees will be allocated for rural infrastructure and agriculture. This is for projects such as the building of roads and millions of homes for the poor, and the conversion of 22,000 rural markets to allow farmers to sell their produce directly to consumers.

The new Budget is seen by many as part of a course correction by the government that has an image of favouring the middle class and businesses.

Mr Modi, who is seeking re-election in 2019, is anxious to court the poor and the farmers, according to the analysts.

The Prime Minister won a massive majority in the 2014 election on the promise of creating jobs and fast-paced economic growth.

While he has implemented big ticket reforms like the goods and services tax and further liberalised the economy, unemployment remains a serious problem. Job creation has not kept pace with the millions entering the job market.

In one indication of the discontent in rural parts, the ruling Bharatiya Janata Party (BJP) won but fared poorly in rural areas in the December elections in Gujarat - Mr Modi's home town and and a BJP bastion.

On Thursday, the party also lost by-elections for three seats in Rajasthan, one of eight polls-bound states.

"I think very clearly given the Gujarat results, this is a reachout to the poor and economically underprivileged. The middle class is anyway supportive of the government. There is just a year left (to the next election) and the government is trying to aggressively do what it can to reach out to people," said political analyst Sandeep Shastri, who is vice-chancellor of the Jain University.

"It is a course correction but the question many are asking is - is it a delayed course correction?" Dr Shastri said.

"Many would argue a year is too short for implementation. But it will become part of the campaign rhetoric in the coming months."

Global analytics company CRISIL said: "Announcing new measures and committing resources is not enough to improve the condition of the farming community... These have to be complemented by measures outside the Budget, such as support from states."

There must also be relentless implementation of the schemes and measures, it added.

Analysts also wonder how the government can find resources for implementing the health insurance scheme, for instance, when the fiscal deficit target is 3.3 per cent of gross domestic product for 2018-19, up from the earlier estimate of 3 per cent.

Professor Biswajit Dhar from the Jawaharlal Nehru University noted that a key requirement for rural India, which accounts for nearly 70 per cent of the population, was to boost agriculture productivity.

"What was really required was focused investment on increasing farm productivity. What happens is that there are too many general measures or statements."

Farmers have been in distress due to unseasonal rains and falling incomes. The government's decision to demonetise high value currency notes has also sucked cash out of the system, hitting the farmers hard.

Every year, hundreds of farmers commit suicide because they are unable to pay back farm loans.

"This is actually an election Budget. Mr Modi is being a smart politician. There are good things in the Budget like medical insurance, and incentives for agro processing," said Mr P. Chengal Reddy, president of the federation of farmers' associations.

But Mr Modi has also increased taxes on agriculture inputs like pesticides, he noted.

"The farm sector is in crisis and it will continue to be in crisis.''

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