Hoping to be re-elected in 2019, Indian Prime Minister Narendra Modi announced tax cuts and an increase in public spending to improve the economic situation of the poorest households. According to the budget proposal sent to Parliament now a month ahead of the usual timetable, 148 billion dollars will be lent to farmers and reduced taxes will help SMEs recover from the decline in activity following surprise demonetization of 500 and 1,000 rupees bank notes.
In his latest New Year Eve speech, Modi welcomed the 33% increase in housing construction in rural areas and detailed the government’s plan of interest subventions and delayed payments for agricultural products such as fertilizers. Modi said he hoped a “healthy debate in the Parliament in the larger public interest” of the 9th world’s largest economic power where two-thirds of the 1.25 billion inhabitants are below the age of 35. Real GDP growth in India is expected to reach 7.2 percent in 2017 and 7.7 percent in 2018, according to the latest IMF data.