NEW DELHI—India unveiled huge handouts for farmers, setting the stage for an election-year spending spree, a possible prelude to implementing a universal basic income in an effort to deal with widespread poverty.

India’s budget for the year starting April 1, which was released Friday, doubled the income at which people have to start paying taxes, while promising payouts to help small farmers. The moves are aimed at shoring up support for Prime Minister Narendra Modi’s party, which hopes to retain control of the world’s largest...