MUMBAI, India (AFP) — Indian stocks Tuesday posted their biggest rise since Prime Minister Narendra Modi came to power almost two years ago, after the government presented a budget expected to boost rural demand.

The main Sensex index on the Bombay Stock Exchange closed up more than three per cent, driven higher by rises in consumer stocks.

At one point the index was up 3.50 per cent but it declined marginally to finish the day 3.38 per cent, or 777.35 points, higher at 23,779.35.

On Monday Finance Minister Arun Jaitley announced spending of US$5.2 billion to double farmers’ incomes over five years through measures including a crop insurance scheme and better access to markets.

He said billions more would be spent on improving rural infrastructure and ensuring all Indian villages have electricity within two years. 

With two-thirds of India’s 1.2 billion population living in rural areas, investors are betting that the pledges will increase consumer spending in the countryside.

Rural India has been suffering after two years of poor monsoon rains, widespread drought and high inflation.

Cigarette-makers, motorcycle manufacturers and sellers of white goods such as refrigerators and washing machines all posted big gains Tuesday.

Conglomerate ITC Ltd was the day’s biggest gainer, surging 9.91 per cent to 325.10 rupees. 

ICICI Bank finished 7.95 per cent higher at 205.10 rupees while Maruti Suzuki and Hero MotoCorp closed up 7.80 per cent and 6.07 per cent respectively.

The market was also cheered by the government’s decision to stick to its plan to reduce the fiscal deficit to 3.5 per cent of gross domestic product in the financial year 2016-17.

“Because the fiscal deficit is to come down there is hope that interest rates might be cut too, and that sentiment pushed the market up today,” Ashutosh Datar, ‎an economist at IIFL Institutional Equities, told AFP.

It marks a bright day in an otherwise gloomy year for the Sensex index, which along with many other global indices has slumped amid fears of a worldwide economic slowdown.