But economists say that may be tough for the finance minister, who will be presenting his first full budget since the Congress party won power last May.

With the need to keep the 24-party ruling coalition united and retain the support of communist allies hostile to reforms, Chidambaran faces a difficult juggling act to balance hopes of industry, investors and ordinary citizens.

"He's going to have come out with a budget which looks good. The mood is very positive. He doesn't want to dampen investment sentiment," government economics advisor Saumitra Chaudhuri, from the ratings agency ICRA, told AFP.

"But it's going to be a bit of a tightrope walk. It's not going to be a 'big bang' budget. He has to survive the (post-budget) sniping and backbiting."

Still, with the economy set to grow around seven percent, making it the fastest expanding major economy after China, shares and foreign investment at record highs, inflation falling and foreign exchange coffers brimming, Chidambaram could not have a better backdrop for his budget.

"The economy is rocking," Omkar Goswami, head of private consulting group CRG Advisory, said.

Markets still fondly remember Chidambaram's 1997 "dream budget" that slashed import tariffs and taxes and was seen as giving a major push to reform.

This time, he must honour government pledges to implement "reforms with a human face" aimed at ensuring India's new prosperity reaches the masses and seen as having powered Congress to its upset win over the Hindu nationalists.

But Chidambaram's freedom to spend is curbed by a fiscal responsibility law obliging the government to shave the central government deficit, which was 4.8 percent of GDP in the last fiscal year, by 0.3 percentage points each year.

India's annual economic survey Friday, traditionally seen as a pointer to the budget's contents, made a powerful pitch for across-the-board reform to woo investment, particularly from abroad.

It said India needed to ease foreign investment caps, relax rigid labour laws and cut duties to international levels if it was to hit even the lower end of its 7.0-8.0 percent long-term growth target.

Economists say without major reforms, India will never attain the growth needed to make a significant dent in poverty levels.

The survey singled out mining and insurance as potential targets for lifting foreign investment ceilings. The government has already hiked investment caps in the fast-expanding telecommunications sector and booming aviation market.

It also identified the hitherto sheltered retail sector as another area that “can invite established global retail brands into the Indian market, thereby creating a greater outlet for sourcing and marketing Indian products."

Until now, India has banned foreign ownership of retail firms but global retailers are increasingly banging on the doors of the country of over one billion people to gain access to what they say is a lucrative market.