Highlights of Modi’s financial incentives in New Year

Prime Minister Narendra Modi announced a slew of incentives to the poor, farmers, women and small businesses on Saturday in a special New Year’s address.The incentives come ahead of the government’s annnual budget, expected some time in February, and before key a election in the northern state of Uttar Pradesh in early 2017.Following are some of the main incentives announced in his speech:


– The number of houses being built for the poor, under the Pradhan Mantri Awaas Yojana (PMAY) programme in rural areas, to be raised by 33 percent.

– Loans of up to Rs 900,000  ($13,200) taken out in 2017 to receive interest rebate of 4 percent.

– Loans of up to Rs 1,200,000  taken out in 2017 to receive interest rebate of 3 percent.

– Loans of up to Rs 200,000 taken in 2017 for new housing, or extension of housing in rural areas, to receive an interest rebate of 3 percent.


Government to bear 60 days interest on select farm loans.

Government to add 200 billion rupees to the 210 billion rupee fund created by National Bank for Agricultural and Rural Development (NABARD) in November.

Government to bear the loss that NABARD suffers by giving loans to cooperative banks and societies at low interest rates.

Government to issue RuPay debit cards within three months to 30 million farmers who have Kisan Credit Cards.


Government to double its loan guarantee scheme to small businesses to 20 million rupees. Widens scope to include non-banking finance companies (NBFCs) from just banks earlier.

– Banks and NBFCs will not levy high interest on these loans, as the Government of India is bearing the cost of underwriting them.

– Asks banks to raise the credit limit to 25 percent from 20 percent of turnover for small businesses.

– Banks asked to raise working capital loans to 30 percent from 20 percent of sales for enterprises that transact digitally.

– Reduces tax liability for digital transactions for small businesses’ with turnover of up to 20 million rupees to 6 percent.


– Aims to double the number of people who benefit from an institution designed to channel credit to disadvantaged people from nearly 35 million people now by giving priority to dalits, tribals, “backward classes” and women.

– Introduces a nationwide scheme for financial assistance to pregnant women: 6,000 rupees will be transferred directly to the bank accounts of pregnant women who undergo institutional delivery and vaccinate their children.

– Senior citizens will receive a fixed interest rate of 8 per cent for a period of 10 years on deposits up to 750,000 rupees. The interest will be paid monthly.

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