Finance Minister Pranab Mukherjee, sticking to the theme of ‘inclusive growth’ espoused by the Congress party-led Government, unveiled breaks for exporters hard-hit by the global downturn and direct subsidies for farmers.

He also urged a return to fiscal responsibility targets as soon as possible.

"The first challenge is to return the GDP growth rate of 9 percent per annum at the earliest," Mukherjee said. "The second challenge is to deepen and broaden the agenda for inclusive development."

Bond yields rose after the announcement of additional spending, while stocks were down by 1.37 percent.

The first budget of Singh's new administration is seen as a roadmap for how he will govern for the next five years after his Congress party-led coalition was reelected by an unexpectedly decisive margin.

Mukherjee called on states to remove bottlenecks for infrastructure projects, and outlined plans for more flexible financing for infrastructure and development of long-distance gas pipelines.