PM Narendra Modi's government is working on good schemes for small businesses (Reuters)New Delhi: Prime Minister Narendra Modi is considering offering cheap loans and free accidental insurance coverage to millions of small businesses, two government sources with direct knowledge of matter said, as he tries to placate a key voter bloc ahead of a general election due by May.Small business groups have been critical of Modi government in past year after many firms were squeezed by a shock move to ban high-value currency notes in 2016, followed by a hasty implementation of a nation-wide goods and services tax (GST) that raised their compliance costs.In a bid to win them back, and following election losses in five states last month, government run by PM Modi's Bharatiya Janata Party recently announced GST concessions and tweaked an ecommerce policy in favour of small traders.More measures are now being planned, said sources, who declined to be named as information was not public.A spokesman for Ministry of Finance did not immediately respond to an email seeking comment.The sources did not quantify amount series of measures would cost government, as details are still being worked out.The government is working on offering a discount of 2 percentage points on loans for businesses with annual sales of less than Rs 5 crore, sources said, and would compensate banks for costs.Small businesses with a top credit rating can get loans from banks at about 9-10 per cent, while lower-rated businesses can be charged around 13-14 per cent.But only about 4 per cent of 70 million small enterprises in India have access to bank credit, said Praveen Khandelwal, secretary general of Confederation of All India Traders.He said 30 per cent of their loans come from country's shadow banking sector, while more than half are provided by private money lenders at rates as high as 25 per cent a month.One of sources said government may also ask banks to open a special window for increasing credit flow to small businesses, which will ensure greater availability of loans.The government is also planning to provide free accidental insurance coverage of up to Rs 10 lakh to small businesses with annual sales of up to Rs 10 core rupees, sources said."Employees of small traders may also get discounts on opting for state-backed insurance schemes," one of sources said.The government has not yet decided if moves would be announced before interim budget on February 1, sources said.The government is also considering a pension programme for retired traders registered with government, and a further discount on interest rates paid on loans to women traders.