NEW DELHI: A series of vote-catching measures planned by Prime Minister Narendra Modi as he braces for a difficult general election may cost more than one trillion rupees ($14 billion), two sources with direct knowledge of the matter said.
Much of the cost of the extra spending or revenue losses would have to be borne by the government that will take charge after the election due by May. The spending is also likely to delay plans to reduce the government’s budget deficit, a key indicator of the nation’s economic health.
The BJP lost three major state elections at the end of last year, largely due to anger in rural India in the face of low crop prices and rising costs. Mr Modi remains the front-runner for the general election, according to opinion polls, but his once-invincible image has been dealt a heavy blow.
The government is expected to unveil handouts mostly aimed at farmers in an interim budget to be presented on February 1, said the sources, both government officials.
While no final decisions have been taken, the measures could include direct transfers of funds into farmers’ bank accounts and interest-free loans for them.
The giveaways will come on top of tax sops, job reservations and policies favouring local businesses that have already been made public.
The new measures have to be announced before election dates are finalised by the Election Commission (EC), possibly in March or April, after which there will be curbs on policies that could influence voting. A spokesman for the ministry of finance did not respond to an e-mail seeking comment.
The BJP’s economic affairs spokesman, Gopal Krishna Agarwal, told Reuters this week that the party favoured an expansionary economic policy that would give space to growth-boosting measures as inflation stays low.
