NEW DELHI, July 10 (Reuters) - Indian Prime Minister Narendra Modi's new government on Thursday unveiled a first budget of structural reforms aimed at reviving growth, winning praise from investors despite a lack of clarity over how he would cap the big fiscal deficit.
Finance Minister Arun Jaitley said he would uphold the fiscal deficit target of 4.1 percent inherited from the last government, while incremental steps were also announced to boost capital spending and reassure foreign investors that they would get fair treatment.
Here are the highlights of the budget:
* Vows to keep fiscal deficit target of 4.1 percent of GDP for 2014/15
* Fiscal deficit forecast to fall to 3.6 percent of GDP in 2015/16, 3 percent of GDP in 2016/17
* Finance Minister says: "We cannot spend beyond our means"
* Tax-to-GDP ratio must be raised, says Jaitley
* GDP growth in 2014/15 estimated at 5.4-5.9 percent year-on-year
* Aims for sustained growth of 7-8 percent in the next 3-4 years
* Nominal GDP growth in 2014/15 expected to be 13.4 percent year-on-year
* Must usher in policies for higher growth, lower inflation
* Raises limit on foreign direct investment in defence sector to 49 percent from 26 percent
* Raises FDI limit in insurance sector to 49 percent from 26 percent
* Pledges to provide necessary tax changes to introduce real estate investment trusts and infrastructure investment trusts
* Jaitley vows to maintain a stable tax environment but stops short of scrapping rules on retrospective tax
* All pending cases of retrospective tax for direct transfers to be examined by committee before action is taken
* Retains tax collection targets and makes no major changes to direct tax rates
* Government will not ordinarily bring any change retrospectively that creates a new liability
* Aims to approve goods and services tax by end of this year
* Extends 5 percent withholding tax on corporate bonds until June 30 2017
* Extends 10-year tax holiday for power generation companies
* Imposes 10 percent customs duty on some telecom products
* Introduces uniform customs duty on all types of coals
* Raises export tax on bauxite to 20 percent from 10 percent
* Raises income tax exemption limits for individuals
* Revenue deficit seen at 2.9 percent of GDP in 2014/15
* Capital receipts forecast to total 739.5 billion rupees in 2014/15
* Targets 634.25 billion rupees from total stake sales of companies in 2014/15; 150 billion rupees from stake sales of non-government companies
* Total expenditure forecast at 17.95 trillion rupees in 2014/15
* To provide 134.5 billion rupees capital infusion to state-run banks in 2014/15
* Allocates 2.29 trillion rupees for defence spending in 2014/15; capital outlay 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
* Plans 100 billion rupees of private capital for start-up companies
* Proposes 378 billion rupees of investment in national and state highways
* 40 billion rupees for affordable housing planned through national housing bank; 80 billion rupees proposed for rural housing scheme
* Net market borrowing forecast at 4.6 trillion rupees in 2014/15
* Gross market borrowing forecast at 6 trillion rupees in 2014/15 versus 5.97 trillion rupees in interim budget
* Forecasts interest payments and debt servicing will total 4.27 trillion rupees in 2014/15
* Plans to make food and petroleum subsidies better targeted
* Rural job-guarantee scheme, which provides 100 days of paid employment a year, will become more focused on asset creation
* Food subsidy bill estimated at 1.15 trillion rupees for 2014/15
* Petroleum subsidy bill seen at 634.27 billion rupees for 2014/15
* Fertiliser subsidy bill forecast at 729.7 billion rupees for 2014/15
* Will focus on acheiving 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."
* "The fiscal deficit target of 4.1 percent put out by my predecessor is indeed daunting. But I have decided to accept the target."
* "The task before me is challenging because we need to revive growth in manufacturing and infrastructure. We need to introduce fiscal prudence and cannot spend beyond our means. For this, the tax-GDP ratio must be improved."
* "A high-level committee will scrutinize retrospective tax cases. We are committed to providing a stable tax regime."
* "[India's farming sector] has risen to the challenge of making India largely self sufficient in providing food for growing population" but there is "an urgent need to set up investment, both public and private" (Compiled by Tommy Wilkes & Shyamantha Asokan)