India's Finance Minister Palaniappan Chidambaram says India will aim for an annual growth rate of 10% while pushing to alleviate poverty.
Mr Chidambaram is pushing for 10% GDP growth
Presenting the annual budget he said: "I believe that growth is the best antidote to poverty."
A survey released on Monday said a surging industrial sector, modest inflation and rising investment will help its economy grow 8.1%.
But it warned that lack of infrastructure could peg growth.
The finance minister said the country's fiscal deficit had been pegged to 4.1% and is estimated to come down to 3.8% next year.
Presenting the budget, Mr Chidambaram announced:
- defence spending up by 7% to $20bn
- increased spending on rural infrastructure of $4.2bn
- a 31% increase in spending on education
- an increase of 22% on spending on health
- old age pension to be increased
- contracts to build five mega-power projects to be awarded by December
He said India's dominant farm sector was poised to grow as well.
"We shall not only achieve but exceed the target of farm production in three years," he said.
India will also build 1,300km of "access-controlled" highways linking key cities, including Mumbai and Baroda, Bangalore and Madras and Delhi and Agra.
Some 96% of the Golden Quadrilateral, a major highway project connecting the four corners of India with the capital Delhi, will be completed by the end of 2006 and the entire project by 2008, he said.
The finance minister said no new taxes will be introduced.
- no change in personal or corporate tax rates
- duty cuts on small cars to 16%
- 5% increase in duty on cigarettes
Mr Chidambaram also announced a decrease in peak tariff rates for non-agricultural products to 15%.
"We are now a short distance away from East Asian rates," he said.
India's economy has now grown at an average rate of 7% over the last four years, mainly driven by the services and industry sectors, but farming output has added impetus recently after some good monsoon rains.