NEW DELHI • Indian Prime Minister Narendra Modi has announced a series of incentives for the poor, farmers, women and small businesses in his New Year's address, and defended his recent decision to abolish high-denomination banknotes.
The televised speech was widely seen as an opportunity for Mr Modi to shore up support after a radical move on Nov 8 to withdraw all 500-rupee and 1,000-rupee bills, accounting for 86 per cent of currency in circulation. He praised Indians for their forbearance.
"In this fight against corruption and black money, it is clear that you would like to walk shoulder to shoulder with us (the government)," he said. "For us in government, this is a blessing ... corruption, black money and counterfeit notes had become so rampant in India's social fabric that even honest people were brought to their knees."
In welcoming news for Mr Modi's government, State Bank of India, the country's largest lender by assets, announced yesterday that it would cut lending rates by 90 basis points, after a surge in deposits of old notes.
Lower lending rates could increase credit growth and spark a revival in private investments.
Mr Modi had urged banks to do more to increase lending to the poor, while announcing a slew of measures including an offer of a 4 per cent discount on interest rates for home loans for up to 900,000 rupees (S$19,120) taken out this year by middle-class Indians.
On Saturday night, Mr Modi also said his government would increase credit guarantees for small businesses and provide additional incentives for digital transactions.
There are steps to help pregnant women and senior citizens, as well as financial support for farmers, an apparent bid to win backing among the huge rural population of Uttar Pradesh that has been hit hard by the cash overhaul.
Mr Modi did not say how the government would pay for the measures, although economists said the package was unlikely to be too costly. It was unveiled as the government gears up to announce its annual budget, probably some time next month.
Members of the main opposition Congress party were quick to criticise the speech. One senior member, Mr Prithviraj Chavan, said the address was vague and lacked accurate accounting details. "It was his day to present a report card and specifically disclose the benefits of demonetisation, but clearly the entire drive has been a failure," he said.
In his speech, Mr Modi sought to cast the move as something all In- dians should support. "I urge all parties and leaders to move away from a holier-than-thou approach, to come together in prioritising transparency, and take firm steps to free politics of black money and corruption," he said.