Budget challenge for India's government

The Indian government is presenting its budget this week, outlining how it hopes to tackle a broad range of challenges in the years ahead. Here, the BBC's business and economics team in India takes a look at the issues.

Rural India

Rural India is likely to be the focus in this week's Indian budget, says the BBC's Karishma Vaswani.

One of the ways this government has tried to spread wealth in the countryside is by creating a massive rural employment plan, which guarantees 100 days of work for one person in every poor household.

Hari Kumar can't find work in the countryside

The scheme is now two years old, but many say its performance has fallen short of expectations.

Until he got a job under the rural employment scheme, Chimo Bore, 20, was struggling to keep his family of 11 people from starving.

Mr Bore says that to support his family he depends on the $2 (£1) a day that this scheme gives him.

"I am the only one they can rely on," he says.

"And this is the only work I can get. Without the money I make from this job, we would surely die."

Not working

The rural employment guarantee plan is the Indian government's attempt to address some of the countryside's biggest problems - poverty and unemployment.

Only 3% of households registered under India's employment plan have managed to find work India's railway expansion The growth of India's slums India's big population challenge

India has already spent some $3bn on this scheme, and is expected to spend much more in this year's budget.

But while many are agreed that the idea behind this scheme is commendable, its implementation has been far from perfect.

Hari Kumar is one of many Indian farmers who has experienced the harsh realities of this plan's failures

He only managed to get five days of work under the rural employment scheme, and was paid five months later .

Only 3% of households registered under India's employment plan have managed to find work.

"I have to go to the city to find work - I don't have a choice," Hari Kumar tells the BBC.

"There's no guarantee of work under the scheme here in my village."

Basic survival

The Indian government says it is trying its best to roll this scheme out across the country.

Chimo Bore is the breadwinner for a family of 11

It has already covered some 200-300 districts and the plan is for the whole country to be covered very soon.

But that may not be soon enough for Mr Kumar, who has to head off to Mumbai to find work to feed his family.

This is often the case for the poorest of India's citizens

Waiting for promises and guarantees from their government isn't an option - when basic survival hangs in the balance.

India's consumers

The India story has never looked better, reports the BBC's Supriya Menon

Many would say this is the country's time under the sun.

But over the past few months consumers here have been holding back due to high interest rates, rising food prices and fears of inflation.

In fact inflation here is recorded at 4.35% for the year to 9 February, because of rising prices of fruits, vegetables and lentils.

Sangeeta More, whose husband works in security, doesn't understand these numbers, but is busy trying to survive.

Inventor Ankit Mehta says Indian investors don't take risks

Stretching her husband's income to feed her family of six has become a daily struggle for her.

Not that long ago Ms More used to pay only 25 cents (12 pence) for a kilo of wheat. These days she pays nearly double.

While the middle class is relatively immune to such price rises, Sangeeta's family is not so fortunate.

"With the high price of wheat it's impossible to buy my regular quantities now, so I have switched to a cheaper cereal and we have wheat only once a day now," she says.

"Every bite has to be measured."

This budget has to help people like Sangeeta, says Shubhada Rao, chief economist at Yes bank.

According to United Nations estimates, almost half of India's population lives on less than $2 a day, which makes it vital for the finance minister to keep prices in check.

"For the finance minister it is a challenge," says Ms Rao.

"On one side he cannot have a very extensively expansionary fiscal stimulus being given because that will once again feed into inflation.

"On the other hand the consumer needs to be protected and consumer demand needs to be revived. I think there will be a lot of measures that may actually propel consumption."

With elections just a year away it is likely that restoring consumer confidence is going be the top priority for the Indian finance minister.

But the real challenge for him would be to try and curb inflation even though it means putting the brakes on India's growth story.

India's entrepreneurs

What can the government do to encourage the companies that will provide jobs in the future? The BBC's Neil Heathcote reports what young start-ups at the Society for Innovation and Entrepreneurship in Mumbai have to say.

Ankit Mehta charges his phone on the way to work, thanks to a small device he has developed that tucks under his bike handlebars.

High-tech entrepreneur Sashkant Suryananrayanan hopes for government help

He is hoping his charger will be a hit in rural areas, where cellphones and bikes are popular, but electricity is in short supply.

A grant from the government helped him build his prototype. Now he needs money to grow the actual company.

Finding investors to come in at such an early stage is proving tricky.

"Angel funding is all about taking risks, right? I've found that people really don't take too much risk," he says.

Low hanging fruit

In India, hi-tech start-ups are a place where angels fear to tread.

Many entrepreneurs in the Sine business incubator hope the government will step in to fill that gap - at least until they are big enough to attract outside funding.

"The government can be the initial risk-taker," says Shashkant Suryanarayanan, who owns a small firm that develops fuel efficient engines.

"If things go well, then private industries can come in and take over from there."

The funding gap has arisen because hi-tech entrepreneurship is a relatively new phenomenon in India.

Earlier this month, Wipro chairman Azim Premji said it would be years before India could come up with a global gadget like the iPod, because it has been so focussed on "low hanging fruit", and developing services rather than products.

Be patient

The question is how to change that.

"A free lunch will not carry business anywhere," points out C Amarnath, professor-in-charge at Sine.

So what can the government do?

He suggests a range of options. It could be first in line to buy and test new ideas. It could give tax breaks to investors who back early-stage companies. It could simplify the paperwork for small firms.

But none of these offer a rapid solution to a government that, before long, will be heading to the polls.

"That's where the government plays a vital role," says Professor Amarnath.

"It shouldn't expect quick results in the next few years. It should be patient."