India unveils budget for recovery after demonetiziation fiasco

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    

*The 2017/18 budget seeks to pursue prudent fiscal management to preserve financial stability
* Jaitley says India is seen as an engine of global growth
* 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 and increase credit flow
*Consumer price index inflation is expected to remain within the central bank’s mandated range of 2-6 percent
* With a better monsoon, agriculture is expected to grow at 4.1 percent in 2016/17
* Agricultural credit target fixed at Rs10 trillion ($147.88 billion) for 2017/18
* Long-term irrigation fund allocated Rs400 billion
* Allocates Rs80 billion for milk processing over three 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
* Allocation for rural, agriculture and allied areas to increase by 24 percent to Rs1.87 trillion
* Allocates Rs480 billion to rural jobs scheme in 2017/18, versus a revised estimate of Rs470 billion in the current fiscal year
* Allocates Rs190 billion for rural road scheme in 2017/18
* On course to complete 100 percent electrification by May 1, 2018, allocating Rs48 billion for rural electrification scheme
* Allocates Rs2.41 trillion for transport sector in 2017/18
* Proposes Rs640 billion in investments in national and state highways in 2017/18
* Proposes to invest Rs1.31 trillion in railways in 2017/18
* India budget 2017/18 allocates Rs550 billion for railways
* Dedicated railway safety fund of Rs 1 trillion 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
* 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 Rs40 billion for market-relevant training for youth
* Total allocation for women and children welfare set at Rs1.84 trillion
* Legislative reforms to be undertaken to simplify and rationalise existing labour laws
* National housing bank to provide Rs200 billion for housing loans
* Affordable housing to be given infrastructure status
* "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 globalisation have the potential to affect exports from many emerging economies, including India."

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