The Indian budget, that comes ahead of elections due by May 2009, has widely seen as pandering to 'populist' policies including a 600 billion rupees ($15 billion; £7.6 billion) scheme to write off the entire debt of the country's small farmers.
The government has also increased education spending by 20 per cent and health funding by 15 per cent, but the farming policy has taken the headlines.
The plan will see the debts of 30 million small farmers written off and financial aid to offered to another 10 million farmers.
"The emphasis on social sectors like health, education and the rural economy do suggest that the budget is leaning towards some populist measures," Yes Bank chief economist Shubhada Rao told the Guardian.
Finance minister Palaniappan Chidambaram said India's annual economic growth was now running at 8.7 per cent down slightly from the 9.6 per cent growth achieved in 2006/07.
Total spending has been budgeted at 7.51 trillion rupees ($188.5 billion) for the fiscal year starting April 1st, up six per cent, revenue from the booming economy is forecast to rise almost 15 per cent.
Defence spending has been increased by ten per cent, while the fiscal deficit in '08/09 will be reduced to 2.5 per cent.
He left corporate tax rates unchanged but said he was raising a tax on short-term capital gains to 15 per cent from ten percent.
The stock market reacted to the move and was down 1.4 per cent on the day.
Further analysis of the Indian budget could be supplied by Aranca, an end-to-end provider of on-demand, custom investment, business and economic research.
