* PM Modi defends ban on higher value cash notes
* Announces incentives for poor, small businesses, agriculture
* Speech comes ahead of annual budget, Uttar Pradesh elections

Indian 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, and defended his shock decision to abolish high denomination bank notes.
The withdrawal of 500 and 1,000 rupee bills on Nov. 8 caused widespread disruption and anger in a country where cash is dominant, and the televised speech was seen as an opportunity to offer financial relief to people suffering most.
Modi had pledged that conditions would improve by the end of the year, but Indians have had to queue outside banks for hours to deposit old money or withdraw limited amounts of new notes.
Analysts have forecast that economic growth will be hit this quarter as a result.
But Modi believes long term gains will outweigh the short term pain; his radical decision was aimed at banishing the shadow economy, boosting taxes, beating corruption and moving towards a cashless society.
"In this fight against corruption and black money, it is clear that you would like to walk shoulder to shoulder with us (the government)," Modi said, speaking in Hindi. "For us in government, this is a blessing."
The prime minister, who swept to power in 2014 on the back of promises to root out graft, said the authorities would continue to stamp it out.
"Serious offences by bank and government officials have come to light. No one will be spared," he said.
The speech came weeks before the government is expected to announce its annual budget, probably some time in February, and ahead of a critical election in the northern state of Uttar Pradesh not long afterwards.
Among measures announced on Saturday, Modi offered a 4 percent discount on interest rates for home loans for up to 900,000 rupees taken out in 2017 by middle class Indians.
He also said the government would increase credit guarantees for small businesses and provided additional incentives for digital transactions.
Some of the incentives appeared to be geared towards the huge rural population, a key constituency in Uttar Pradesh, including reducing interest on certain loans for agriculture.
Modi did not say how the government would pay for the new measures, although his administration has sought to keep budget deficits under control.
Members of the main opposition Congress party were quick to criticise the speech.
One senior member, 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.

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