India's Prime Minister Narendra Modi is launching the world’s biggest health insurance scheme that the government says will grant half a billion people the entitlement to free health insurance.

"Modicare" was anounced in the Indian federal budget earlier this year.  It aims to cover people living below the poverty line - the bottom 40 percent of India's population of 1.25 billion  - by providing 500,000 rupees (about AU$9,600) in annual health insurance to treat serious ailments.  This is expected to cost AU$2.2 Billion per year initially, and funding will be increased gradually according to demand.

The Indian government estimates that the average family spends 60 percent of its money on healthcare, which is an huge expenditure for poor people who live on a couple of dollars a day.

But Indian hospitals and clinics are already overburdened.  A report in the British medical journal The Lancet found that 1.6 million deaths per year can be traced to substandard medical care in India - the highest anywhere in the world.  Modicare doesn't appear to add space for hundreds of millions of new patients.

Critics believe Modi's plan is politically motivated to win support in his reelection bid next year. 

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