(Bloomberg) -- Prime Minister Narendra Modi began his second term by expanding an income support program for India's small farmers, increasing the initiative's annual cost to $12.5 billion for the new government that's facing an economic slowdown.
The newly-appointed Cabinet approved extending the cash distribution plan to 20 million more farmers, taking the total beneficiaries to 145 million people who would each get 6,000 rupees ($86) a year, according to a statement. The total annual spending on the program will rise by 120 billion rupees to 870 billion rupees, Minister for Agriculture and Farmer Welfare Narendra Singh Tomar said in a briefing in New Delhi on Friday.
Modi is rewarding a key voter base after returning to power with a stronger mandate, and the approval to expand the program came on the day data showed the economy expanded at the slowest pace in several quarters. Meeting election pledges to spend billions of dollars to provide support for low-income earners amid slowing growth and trailing revenue collections could be one of the challenges Modi has to overcome in his second term.
India unveiled the income support program for small farmers in February, when the government proposed spending 750 billion rupees this fiscal year. The populist move came just after the main opposition Congress party promised an income-guarantee program for the poor if voted back to power.
According to the government's interim budget proposal, farmers with as much as 2 hectares (4.9 acres) of land will get a total of 6,000 rupees a year in three equal installments.
To contact the reporter on this story: Debjit Chakraborty in New Delhi at dchakrabor10@bloomberg.net
To contact the editors responsible for this story: Shamim Adam at sadam2@bloomberg.net, Teo Chian Wei
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