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India's finance minister arrives at parliament to unveil his new federal budget.

It's no easy job.

Pranab Mukherjee is under huge pressure to cut the nation's fiscal deficit that's likely finish the year well over its target of 4.6 per cent of GDP.

Inflation is also high

But Mukherjee says growth in the coming year is expected to slow.

SOUNDBITE: PRANAB MUKHERJEE, INDIA'S FINANCE MINISTER, SAYING (English):

"Taking a bird's-eye view of the entire economy, keeping in mind the difficult global environment, I expect India's GDP in 2012-13 to be 7.6 per cent, plus-minus 0.25 per cent."

The government's move to raise rail fares for the first time in eight years on Wednesday showed how tough things are going to be.

The measure sparked a backlash from one of its key coalition allies.

That's damaging its ability to make politically tough decisions like raising diesel prices to help ease the fiscal deficit.

India has a huge subsidy bill, pushed up to about 2. 5 per cent of GDP by rising fuel prices.

Mukherjee's told parliament in his budget speech the bill should be slashed to less than 2 per cent in the coming year.

That, he says, will need speedier introduction of economic reforms.

Prime Minister Manmohan Singh's government is already unpopular with voters, who showed their displeasure in the recent state elections.

More than a year of corruption scandals resulting in policy gridlock had added to the crisis.

But this year's budget is seen as a last chance to rein in the nation's huge fiscal deficit.

With federal elections due in 2014 the budget a year from now is likely to be laden with voter-pleasing populist spending measures.

Paul Chapman, Reuters