India's Modi unveils handouts, tax breaks after cash ban

New Delhi - Indian Prime Minister Narendra Modi unveiled a series of cash handouts, cheaper loans and tax breaks for women, farmers and businesses as he defended the move to ban high-value banknotes.

In a New Year's Eve address, Modi thanked people for their "patient sacrifice, discipline and resolve" in supporting the withdrawal of some 85% of all bills in circulation, which he said had laid the foundation for a better India.

His televised remarks followed the expiry of a deadline for people to swap their old 500 rupee ($7.30) and 1 000 rupee notes for new ones on Friday.

The Indian leader has been widely hailed for his assault on tax evasion but long queues outside banks, a cash crunch and policy flip-flops since the November 8 announcement quickly led to anger in some quarters.

"The troubles faced and the sacrifices made by the people to build a better India is an example for all of us," Modi said in his 45-minute speech, describing the cash ban as a "big fight" against corruption and unaccounted wealth.

In an effort to appease those most affected by the cash crunch, Modi said the government would offer cheaper loans to home buyers and farmers as well as cash handouts for pregnant women.

He also unveiled tax breaks for small and medium-sized businesses.

READ: India passes landmark tax reform 

India's main opposition Congress party was quick to dismiss Modi's announcement and demanded clarifications and figures from him on the exact benefits of the move to reduce cash in use.

"Disappointed with PM's speech. Many questions left unanswered. His decision paralysed economy; the country can't run this way," party spokeperson Randeep S Surjewala said on Twitter.

Modi and the ruling Bharatiya Janata Party will learn if his risky gamble has paid off when Uttar Pradesh holds the first of several 2017 state elections, likely in February.