HIGHLIGHTS-India unveils budget for recovery and the poor after cash crunch

Source : REUTERS
Last Updated: Wed, Feb 01, 2017 12:20 hrs

NEW DELHI, Feb 1 (Reuters) - India is a "bright spot" in the world economy, Finance Minister Arun Jaitley said as he unveiled his annual budget on Wednesday, adding that the impact on growth from the government's cash crackdown would wear off soon. Delivering his fourth budget address to parliament, Jaitley vowed to spend more on rural areas, infrastructure and poverty alleviation in what he called a budget for the poor. Here are the highlights of Jaitley's budget for the 2017/18 fiscal year that begins on April 1. FISCAL DEFICIT * The 2017/18 budget seeks to pursue prudent fiscal management to preserve financial stability GROWTH * Jaitley says India seen as an engine of global growth DEMONETISATION * Demonetisation "a bold and decisive measure", will make GDP bigger and lead to higher tax revenues - finance minister * Hit to economy from government decision to outlaw high-denomination notes will be "transient", effects of demonetisation not expected to spill over to next year * Pace of remonetisation has picked up and will soon reach comfortable levels * Surplus money in the banking system will lower borrowing costs, increase credit flow INFLATION *Consumer price index inflation is expected to remain within the central bank's mandated range of 2 to 6 percent AGRICULTURE * With a better monsoon agriculture is expected to grow at 4.1 percent in 2016/17 * Agricultural credit target fixed at 10 trillion rupees ($147.88 billion) for 2017/18 * Long-term irrigation fund allocated 400 billion rupees * Allocates 80 billion rupees for milk processing over 3 years * Farm insurance to cover 40 percent of net sown area, up from 30 percent last year * Modern law on contract farming will be drafted and circulated to states RURAL SPENDING * Allocation for rural, agriculture and allied areas to increase by 24 percent to 1.87 trillion rupees * Allocates 480 billion rupees to rural jobs scheme in 2017/18, versus a revised estimate of 470 billion rupees in the current fiscal year * Allocates 190 billion rupees for rural road scheme in 2017/18 * On course to complete 100 percent electrification by May 1, 2018, allocating 48 billion rupees for rural electrification scheme INFRASTRUCTURE * Allocates 2.41 trillion rupees for transport sector in 2017/18 * Proposes 640 billion rupees investments in national and state highways in 2017/18 * Proposes to invest 1.31 trillion rupees in railways in 2017/18 * India budget 2017/18 allocates 550 bln rupees for railways * Dedicated railway safety fund of 1 trillion rupees over next five years * Transformative measures have to be taken to make Indian railways competitive * Railways to withdraw service charges on online booking of tickets SPENDING * India to spend more in rural areas, infrastructure and poverty alleviation * The government will continue process of economic reforms for the benefit of the poor * To allocate 40 billion rupees for market-relevant training for youth * Total allocation for women and children welfare set at 1.84 trillion rupees LABOUR * Legislative reforms to be undertaken to simplify, rationalise existing labour laws HOUSING * National housing bank to provide 200 billion rupees for housing loans * Affordable housing to be given infrastructure status FINANCE MINISTER'S COMMENTS * "India stands out as a bright spot in the world economic landscape." * "My approach in preparing the budget is to spend more on rural areas, infrastructure and poverty alleviation with fiscal prudence." * "Signs of retreat from globalization have potential to affect exports from many emerging economies, including India." ($1 = 67.6225 Indian rupees) (Compiled by Tommy Wilkes; Editing by Sanjeev Miglani)



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