South Asia correspondent Mike Wooldridge: "Mr Vajpayee was under pressure on many fronts"

Six lane highways will link Kashmir in the north to Kanniyakumari at the southern tip of India and Silchar, in the east of the country, to Saurashtra, in Gujarat in the west. Work will begin at 20 locations before the end of the year.

Five cities will also get what Prime Minister Atal Bihari Vajpayee described as "world-class" international airports. He also said the government intended to build two million new homes a year.

Excess capacity

Half of India has never made a call

He said the projects had tremendous job-making potential and would help the construction sector and the "cement industry, which is facing the problem of excess capacity".

The prime minister also said a global satellite telephone service, linked to the worldwide Iridium network, will be launched at the beginning of next month and the provision of rural telephones will be speeded up.

In India, up to half the 975 million population has never made a phone call.

The announcement follows warnings that many key industries are experiencing an unprecedented slowdown in demand.

Pressure for results

At a meeting of the Federation of Indian Chambers of Commerce and Industry (FICCI) in Delhi, Mr Vajpayee told India's business leaders that private and foreign investors would be encouraged to take part.

Dealer's depression: Indian shares have plummeted 10% since 1 October

He is under pressure to deliver results on the economy. FICCI President KK Modi told the prime minister that many of India's large industries had experienced an unprecedented slowdown in demand. These include iron and steel, cement, paper, chemicals and textiles.

Economic sanctions imposed after India conducted nuclear tests in May have compounded the government's difficulties.

Growth slipped back to 5.1% last year following several years of much higher economic expansion brought about by economic liberalisation.

Mr Vajpayee responded to a longstanding plea from industrialists by announcing that the government would allow companies to buy back shares to increase the value to investors.