India eyes higher growth in next fiscal year

"Today, as I stand before you, I can say with some confidence that we have weathered the crisis well," he said.

He said the government would review the stimulus measures, which were introduced during the global economic slowdown, adding it plans to cut the fiscal deficit by next year.

The budget deficit has increased by 6.9 percent of the GDP in the current financial year. But Mukherjee said the government would try to bring it down to 5.5 percent of the GDP next year.

Boosting social spending

Recent official figures have shown that last year’s poor monsoon slowed the economic growth sharply in the final quarter of 2009. Mukherjee announced that government would boost spending in the agricultural sector and provide farmers more time to repay their loans.

He also said the government would maintain focus on infrastructure development and social spending. It will additionally increase investment in rural and urban development as well as education and healthcare. Defense expenditure has been increased by almost 4 per cent to nearly 23 billion euros.

To increase government income, Mukherjee has announced a number of tax measures including a plan to introduce a countrywide goods and services tax. Excise taxes have been increased by an average of 2 percentage points.

Opposition to fuel price hikes

A proposal to increase fuel duties, however, prompted the opposition parties to walk out from parliament. The main opposition Hindu Nationalist Members of the Bharatiya Janata Party (BJP) said the hike in fuel prices would further push up inflation and affect the poor.

India's annual rate of inflation increased to 8.5 percent in January from 7.3 percent in the previous month.

Meanwhile the industrial sector has praised the budget proposals as "pragmatic and positive". The benchmark Sensex also responded positively to the budget, and closed by showing a surge of more than 1 percent.

du/dpa/Reuters/AFP
Editor:Thomas Baerthlein