India budget 2017
Indian Finance Minister Arun Jaitley arrives at Parliament to present the 2017 budget in New Delhi on 1 February Adnan Abidi/Reuters

India will be spending big in the 2017 financial year on infrastructure, rural development and towards alleviating poverty. Finance Minister Arun Jaitley made a series of announcements as he presented the Annual Financial Statement of the country on Wednesday (1 February).

The government is looking to spend a record $7.09bn (£5.69bn) on its rural job guarantee programme that will provide every rural household at least 100 days of work a year.

In his budget speech, Jaitley termed India a "bright spot" in the global economy and said that spending on rural development and the farm sector would increase by 24% as the government wants to double income from agriculture over the next five years.

This year's budget assumes significance as Prime Minister Narendra Modi had announced the demonetisation of high-value banknotes worth 86% of the country's cash on 8 November, 2016.

Terming the move as bold and decisive, Jaitley said the decline in economic activities following demonitisation was expected to have a transient effect on the economy. The announcement hit consumer demand, disrupted supply chains and hurt capital investments.

Meanwhile, for Indian taxpayers the finance minister announced a 50% cut in taxes levied on earnings between Rs 250,000 and Rs 500,000 (£2,945 to £5,888) a year.

For the year 2017/18, Jaitley said the federal fiscal deficit target would be 3.2% of GDP.

According to the Economic Survey, released ahead of the budget, India's economy is expected to grow by 6.5% in the year to March 2017, down from 7.6% in the previous financial year.