India plans to increase state subsidies on rural housing in the upcoming federal budget by as much as 50% from the previous year to more than $6.5 billion after setbacks for the prime minister's party in elections, two government sources said. The planned hike in housing subsidies is part of a broader government initiative to boost spending on rural infrastructure, including village roads, and a jobs programme to help millions of young people stuck in the agriculture sector amid limited manufacturing jobs. If approved, it would mark the largest annual increase in federal spending on the rural housing programme since its inception in 2016. "The government is worried over widespread rural economic distress, driven by higher food inflation and sluggish growth in farmers' incomes," said one of the government sources with knowledge of budget discussions. Following electoral defeats for the prime minister's party, India intends to boost state subsidies for rural housing in the next federal budget by up to 50% from the previous year, to over $6.5 billion, according to two government sources. The government's proposal to increase expenditure on rural infrastructure, such as village roads, and a jobs project to assist millions of youth trapped in the farm sector due to a lack of manufacturing employment includes an increase in housing subsidies. If authorised, it would represent the biggest yearly rise in federal funding for the rural housing initiative since the programme's launch in 2016. "The government is worried over widespread rural economic distress, driven by higher food inflation and sluggish growth in farmers' incomes," said the second government source, noting that federal subsidies for rural housing could exceed Rs 550 billion ($6.58 billion), up from Rs 320 billion last fiscal year. He stated that the government may ask parliament for permission for this additional expenditure later, rather than as part of the budget, but that state spending on the rural employment project was anticipated to rise significantly from an earlier estimate of Rs 60 billion. He added that, in addition, a different proposal to increase village road funding from previous projections of Rs 120 billion in the current budget year was being considered. Given that they were not permitted to discuss budget suggestions with the media, both sources spoke on the condition of anonymity. Economists and business executives begged the government to increase rural expenditure during pre-budget discussions, pointing out that private consumption was expanding at a rate of less than half the yearly growth in the economy, which was close to 8%. According to the sources, during the next several years, the federal and state governments are likely to set aside up to Rs 4 trillion ($47.89 billion) to build 20 million residences for the impoverished in rural regions, with the federal government providing around Rs 2.63 trillion. When questioned about expenditure intentions, a spokeswoman for the finance ministry remained silent. Shortly after taking office last month, the Modi government revealed its intentions to contribute to the building of 30 million homes in both rural and urban regions without providing specific financial information. The second source stated that the Ministry of Rural Development has suggested raising state subsidies to around Rs 200,000 ($2,395) per housing unit, up from Rs 120,000 before, due to growing raw material costs.