HIGHLIGHTS: India 2016/17 budget focuses on farmers; sticks to deficit targets

NEW DELHI (Reuters) - Indian Finance Minister Arun Jaitley unveiled a budget for the poor on Monday, announcing new rural aid and health programmes in a strategy shift that could boost his ruling party in coming state elections.

Presenting his third budget, Jaitley reiterated a forecast that it would grow by 7.6 percent in the fiscal year that is drawing to a close. But he said the government wanted to ensure that the benefits of growth were more widely shared among India's 1.3 billion people.

"We have a shared responsibility to spend prudently and wisely for the people, especially for the poor and downtrodden," the 63-year-old finance minister said in his opening remarks to lawmakers.

Here are the highlights of Jaitley's budget for the fiscal year

that begins on April 1.

FISCAL DEFICIT

* Fiscal deficit seen at 3.9 percent of GDP in 2015/16

* Fiscal deficit seen at 3.5 percent of GDP in 2016/17

* Plan expenditure seen at 5.5 trillion rupees in 2016/17

* Proposes to set up panel to review fiscal responsibility management act

RURAL ECONOMY

* Rural jobs programme allocated 385 billion rupees ($5.61 billion) in 2016/17

* Farmer welfare budget to total 359.84 billion rupees

* Rural road development to get 190 billion rupees

* Target of agriculture credit at 9 trillion rupees

* Interest subvention towards farm loans at 150 billion rupees

POLICY REFORMS

* Bankruptcy code for financial firms to be introduced in parliament in 2016/17

* RBI act is being amended for implementing monetary policy framework

* To list general insurances companies on stock exchanges

BANKING REFORMS

* Government to infuse 250 billion rupees capital into state-run banks in 2016/17; will find resources for additional capital for banks if required

INFRASTRUCTURE

* Allocates 2.21 trillion rupees for infrastructure development for 2016/17

* Allocation for roads and highways development at 550 billion rupees

* Capital expenditure on roads and rail development at 2.18 trillion rupees

INVESTMENT

* 100 percent foreign direct investment to be allowed in food processing industry

* Promises further reforms in foreign direct investment policy in insurance, pension, asset recast companies

DIVESTMENT

* To encourage central public enterprises to divest own assets for raising resources for new projects

MARKET REACTION

* India's benchmark 10-year bond yield falls 5-6 bps as Jaitley sets 2016/17 fiscal deficit target at 3.5 percent of GDP

* India's state-owned banks shares pare gains after Jaitley announces lower-than-expected capital infusion; SBI down 0.5 percent

* Indian rupee gains sharply to 68.61/dollar from around 68.70 levels on 2016/17 fiscal deficit target

($1 = 68.6700 Indian rupees)

(Compiled by Tommy Wilkes and Krishna N. Das)