India's government is drawing up a major new welfare reform which would hand small plots of land to millions of homeless poor in the countryside, reports said on Thursday.

The proposed entitlement programme, which comes as Prime Minister Manmohan Singh's administration is struggling to rein in the public spending deficit, is seen as a potential vote-winner in rural areas ahead of elections next year.

The draft National Right to Homestead Bill, which must be approved by cabinet and then passed by parliament, would provide for a minimum of 400 square metres (4,356 square feet) to be given to each homeless family, The Indian Express said.

An estimated eight million rural families are believed to be homeless and landless.

"The idea is to provide statutory backing... to the provision of homestead land for those without land and shelter," Rural Development Minister Jairam Ramesh, who won a 46 percent increase in funding in the new budget, told the Mail Today newspaper.

"The government is committed to giving rights to the landless poor in the country."

The left-leaning ruling Congress party is looking to rejuvenate itself ahead of elections due in the first half of 2014 after a second term in power marked by corruption scandals and a sharp slowdown in economic growth.

A separate $1.9 billion welfare programme guaranteeing food for the poor is set to be introduced soon in parliament, following previous laws guaranteeing education and the right to 100 days of paid work annually for impoverished labourers.

The Homestead Bill is set to be tabled in parliament in the monsoon session, which normally begins around August, the Mail Today said.

Ratings agencies and investors are watching India's public finances closely amid fears that the country is over-stretched, with a public deficit expected to run at 5.2 percent of gross domestic product in this financial year.

Last October tens of thousands of poor Indians began a 350-kilometre (220-mile) march to New Delhi to protest the plight of marginalised rural communities excluded from the country's economic development.

Under a deal reached in Agra to stop the protests the government pledged land reforms.