By Nupur AcharyaAn assured income for Indias 120 million small farmers may help sway rural voters, helping Prime Minister Narendra Modis party staring at a close contest at elections this spring, according to UBS Securities India Pvt.The scheme remains a wild card that, if implemented and marketed well, could influence voting behaviour, analysts led by Gautam Chhaochharia wrote in a February 16 report after meetings with leaders and policymakers in New Delhi and Uttar Pradesh, a swing state that the Bharatiya Janata Party won in 2014.The governments February 1 Budget contained $13 billion of measures including an annual 6,000-rupee payout to marginal farmers.
The policy may reap dividends because it involves an yearly rather than a one-off payment, with the first installment likely due in the next few weeks, the analysts wrote.The income support is a guaranteed cash flow that farmers can use as a collateral to take out loans from banks -- it can be levered 3-4 times, they said.
It also reduces the tail part of the volatility and we think farmers will likely respond to it positively.