India’s prime minister, Narendra Modi, has launched the world’s biggest health insurance scheme, promising free coverage for half a billion of India’s poorest citizens ahead of national elections in May.



The bottom 40% of India’s 1.25 billion people will be covered under the flagship program, dubbed “Modicare”, unveiled in the federal budget earlier this year.

The 100 million lowest-income families will be provided 500,000 rupees ($6,900) – a sizeable sum in India – in annual health insurance to treat serious ailments.

Modi handed medical cards out at the launch in Ranchi, capital of the eastern state of Jharkhand, calling it a historic day for India.

“We want to strengthen the hands of the poor and stand shoulder to shoulder with them in pursuit of good health,” he said on Twitter.

The scheme is expected to cost the central and 29 state governments $1.6bn per year. Funding will be increased gradually according to demand.

India’s overburdened public health system is plagued by a shortage of facilities and doctors and most people use private clinics and hospitals if they can afford to.

More than 60% of the average family’s spending goes on medicines and healthcare, the government estimates. A private consultation can cost 1,000 rupees ($15), a huge sum for millions living on less than $2 a day.

A report published this month by The Lancet medical journal found substandard healthcare was responsible for an estimated 1.6 million deaths a year in India – the highest anywhere in the world.

Modi will seek a second term in next year’s elections on a platform of pro-poor policies and “Modicare” is a key plank of his pitch to low-income Indians. But critics have questioned how the government plans to fund such an enormous safety net.

“This is going to be another scam. It will benefit only private insurance companies. The citizen of the country will realise later that it is nothing but an election gimmick,” said Sanjay Nirupam from India’s main opposition Congress Party.