New Delhi, India (BBN)-India's new government is lifting some caps on foreign direct investment (FDI), tightening borrowing limits and plans to introduce a goods and sales tax as part of what it is calling a "budget for growth".

Finance Minister Arun Jaitley said India's people were "exasperated" after two years of economic slowdown, reports BBC.

India's economy has slowed markedly in recent years, growing by 4.7 percent in 2013-14.

In 2010-11, growth was 8.4 percent.

Modi's government has promised reforms aimed at creating jobs.

The budget is also expected to contain measures designed to slow inflation.

"We shall leave no stone unturned in creating a vibrant and strong India," Jaitley told reporters ahead of presenting the budget.

Later, Jaitley told the parliament that Asia's third largest economy would grow at rate of 7-8 percent within three to four years, and announced that his government would increase caps on foreign investment in defence and insurance sectors to 49 percent from 26 percent.

He also set a fiscal deficit target of 4.1 percent of gross domestic product (GDP) for this year with further cuts in coming years – 3.6 percent in 2015-16 and 3 percent in 2016-17.

"We cannot leave behind a legacy of debt for future generations," he said.

Jaitley also spoke about plans to introduce a goods and sales tax (GST) this year.

DEFICIT TARGET

A government survey, published on Wednesday, said the country's fiscal situation was worse than it appeared.

"Inflation needs to be moderated further. The fiscal deficit needs downward correction over the next two years," said Finance Minister Arun Jaitley, who will present Thursday's budget.

The report forecast GDP growth of between 5.4 percent and 5.9 percent in 2014-15, but warned that weak monsoon rains, which are essential for farming, could keep growth closer to 5.4 percent.

Last year, credit ratings agency S&P warned there was a one-third chance of a downgrade of India's credit rating to "junk" without a big improvement in the fiscal deficit and in implementing reforms.

Modi won a landslide general election victory in May with a pledge to boost growth and create jobs for the one million people who enter India's workforce every month.

BBN/SS-10July14-1:22pm (BST)