NEW DELHI (Reuters) - Prime Minister Narendra Modi's new government on Thursday unveiled a budget that it said can revive growth even while curbing borrowing, after the country's longest slowdown in a quarter of a century.
Modi's government, in office for less than two months, said it would raise caps on foreign investment in the defence and insurance sectors, and launch a tax reform to unify India's 29 federal states into a common market.
Here are the highlights of the budget presented by Finance Minister Arun Jaitley.
FISCAL DEFICIT
* Accepts fiscal deficit target of 4.1 percent of GDP for 2014/15
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* Tax-to-GDP ratio must be raised
GROWTH
* Aims for sustained growth of 7-8 percent in the next 3-4 years
* Finance minister says he is bound to usher in policies for higher growth, lower inflation
TAXATION
* Aims to approve goods and services tax by end of this year
* Will not change rules on retrospective tax. All pending cases of retrospective tax for indirect transfers to be examined by a high-level committee before action is taken
* Proposes changes in transfer pricing mechanism
* Extends 5 percent withholding tax on corporate bonds until June 30 2017
* Will provide the necessary tax changes to introduce real estate investment trusts and infrastructure investment trusts
FOREIGN DIRECT INVESTMENT
* Raises limit on foreign direct investment in defence sector from 26 percent to 49 percent
* Raises FDI limit in insurance sector from 26 percent to 49 percent
SPENDING
* Capital outlay for defence raised by 50 billion rupees over interim budget
* Earmarks 70.6 billion rupees to create 100 "smart cities"
* Proposes 50 billion rupees for warehousing capacity; 100 billion rupees of private capital for start-up companies; and 378 billion rupees of investment in national and state highways
* 40 billion rupees for affordable housing proposed through national housing bank and extends tax incentives for housing loans
* Proposes 80 billion rupees for rural housing scheme
SUBSIDIES
* Plans to make food and petroleum subsidies more targeted
* Rural job-guarantee scheme, which provides 100 days of paid employment a year, will become more focused on asset creation
AGRICULTURE
* Will focus on achieving 4 percent growth per year in agriculture
* Sets farm credit target at 8 trillion rupees for 2014/15
* Proposes a long-term rural credit fund with an initial corpus of 50 billion rupees
FINANCE MINISTER COMMENTS
* "We have no option but to take some bold steps to spurt economy; these are only the first steps and are directional."
* "Slow decision making has resulted in a loss of opportunity"
(Compiled by Tommy Wilkes & Shyamantha Asokan)