India's 2014/15 budget

NEW DELHI (Reuters) - Prime Minister Narendra Modi's new government unveiled what it called a budget for growth on Thursday, vowing to curb borrowing after the Asian giant's longest economic slowdown in a quarter of a century.

India's economy is stuttering under high inflation and the worst slowdown since free-market reforms in the early 1990s, and the budget is the first major test of Modi's reformist credentials since he swept to power in May with a pledge to boost growth and create millions of new jobs.

Here are the highlights of the budget presented by Finance Minister Arun Jaitley.

FISCAL DEFICIT

* Accepts fiscal deficit target of 4.1 percent of GDP for 2014/15

* Fiscal deficit seen at 3.6 percent of GDP in 2015/16

* Finance Minister says: "We cannot spend beyond our means"

* Tax-to-GDP ratio must be raised

GROWTH

* Aims for sustained growth of 7-8 percent in the next 3-4 years

* Finance minister says he is bound to usher in policies for higher growth, lower inflation

TAXATION

* Aims to approve goods and services tax by end of this year

* Will not change rules on retrospective taxation

* All pending cases of retrospective tax for indirect transfers to be examined by a high-level committee before action is taken

* Proposes changes in transfer pricing mechanism

INVESTMENT

* Raises limit on foreign direct investment in defence sector from 26 per cent to 49 per cent; raises FDI limit in insurance sector to 49 percent

* Earmarks 70.6 billion rupees to create 100 "smart cities"

* Will provide the necessary tax changes to introduce real estate investment trusts and infrastructure investment trusts

* Proposes 40 billion rupees for affordable housing through national housing bank and extends tax incentives for housing loans

SUBSIDIES

* Plans to make food and petroleum subsidies more targeted

* Rural job-guarantee scheme, which provides 100 days of paid employment a year, will become more focused on asset creation

* Proposes 80 billion rupees for rural housing scheme

FINANCE MINISTER COMMENTS

* "Slow decision making has resulted in a loss of opportunity"

(Compiled by Tommy Wilkes & Shyamantha Asokan)