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India's 2017 budget focus on rural and infrastructure spending

Staff Writer | February 1, 2017
India's Finance Minister Arun Jaitley presented the budget for the fiscal year 2017-18 in the parliamen.
Minister Arun Jaitley
Economy in India   The three challenges
The budget is giving thrust to spending on rural areas and infrastructure to cushion the economy that experienced a slowdown due to the withdrawal of high denomination currency notes in circulation.

The country remains a "bright spot" in the world economic landscape, Jaitley said in his budget speech.

However, the three challenges in the current global scenario are the monetary stance of the U.S. Federal Reserve, uncertainty in commodity prices, especially crude oil, and the retreat from globalization.

The minister said that demonetization is a bold and decisive measure in a series of steps to arrive at new norm of bigger, cleaner and real GDP. He said the impact of demonetization is not expected to spill over into next year.

Jaitley said he firmly believes that the Goods and Services Tax, demonetization, JAM modes of identification will have an epoch-making impact on the lives of people.

The surplus liquidity in the banking system, created by demonetization, will lower borrowing costs and increase the access to credit, Jaitley said.

The government raised rural and agriculture spending and outlay for affordable housing ahead of assembly elections in key states.

With a better monsoon, the agriculture sector is forecast to expand 4.1 percent in the financial year 2017, he said. The minister pledged funds for agricultural credit and rural electrification.