NEW DELHI — The new government of Prime Minister Narendra Modi of India on Thursday released a budget that it said would revive economic growth after the longest slowdown in a quarter of a century, even while curbing borrowing.
Mr. Modi's government, in office for less than two months, said it would raise caps on foreign investment in the military and insurance sectors and initiate a tax overhaul to unify India's 29 states into a common market.
Delivering his maiden budget, Finance Minister Arun Jaitley told Parliament that India's 1.2 billion people were "exasperated" after two years of economic growth of less than 5 percent.
He vowed that the economy would expand at an annual rate between 7 and 8 percent within three to four years.
"We shall leave no stone unturned in creating a vibrant and strong India," Mr. Jaitley, 61, told lawmakers after climbing the steps of Parliament and showing his budget briefcase to television cameras.
Mr. Modi, 63, won a landslide general election victory in May with a pledge to create jobs for the one million people who enter India's work force every month.
He has since warned that "bitter medicine" is needed to nurse the economy back to health from high inflation and the worst slowdown since market reforms in the early 1990s unleashed an era of rapid growth.
At the same time, Mr. Jaitley vowed to adhere to the "daunting" budget deficit target of 4.1 percent of gross domestic product for the fiscal year ending in March 2015 that the government inherited from its predecessor.
"I have decided to accept this challenge — one fails when one stops trying," Mr. Jaitley told the lower house of Parliament. He said the budget deficit would be reduced to 3.6 percent in the following two fiscal years.
Mr. Jaitley's commitment to fiscal discipline was stronger than many independent economists had expected. With the deficit already approaching half of the annual target just three months into the fiscal year, they expected him to raise the borrowing target to 4.4 percent for the current fiscal year.
"Fiscal prudence is of paramount importance," he said. "We cannot leave behind a legacy of debt for our future generations."
The government's other major policy initiatives had been broadly flagged in advance.
Mr. Jaitley said he wanted a solution by December on how India would impose a national tax on goods and services, promising that the government would be "more than fair" in its dealings with state governments on allocation of revenue.
He also said he would set up a high-level committee to review retroactive tax claims blamed for choking off foreign investment after companies such as Britain's Vodafone were hit with heavy demands.
Mr. Jaitley raised limits on foreign investment in military and insurance ventures to 49 percent from 26 percent.
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