The Indian government has announced a budget aimed at combating poverty and maintaining high economic growth. The government also plans to increase military spending, while reducing the budget deficit.

Finance Minister P. Chidambaram says the government will increase spending on primary education, health and rural infrastructure. The budget aims to improve the lot of the nearly 250 million Indians who live on less than one dollar a day. He also promised measures to boost employment opportunities for the millions who are have no jobs despite the high economic growth of recent years.

The Congress-led, communist-backed coalition government was elected last year on a pledge to improve the lot of the poor.

Unveiling the country's annual budget Monday, Mr. Chidambaram says those promises will be fulfilled.

"Given the resilience of the Indian economy, it is possible to mobilize resources and launch a direct assault on poverty and unemployment," he said.

Mr. Chidambaram promised to cut the fiscal deficit to 4.5 percent, from nearly five percent the previous year. But analysts have questioned whether this can be achieved in view of the host of programs to help the poor.

The government has also increased defense spending by nearly eight percent, to $19 billion, to modernize its military.

The finance minister says India's economy is expected to grow at 6.9 percent in the fiscal year ending March 2005. That is lower than the 8.5 percent registered the previous year - but still among the fastest in the world.

"As the year draws to a close we can predict confidently that all the engines of economy are running at nearly full speed," said Mr. Chidambaram.

Business leaders such as Tarun Das, of the Confederation of Indian Industry, have welcomed the budget, saying it will help the economy remain buoyant.

"Reforms are on track. We need to keep moving, head towards ten percent growth in GDP, and I think this budget is taking us that way," said Mr. Das. "It is a steady, stable, continuity budget. We are on a good track now as an economy, let us go down this road."

Many economists say a rapidly expanding services and manufacturing sector will keep India's $600 billion economy on the path of high growth over the coming decade.