Promising to halve poverty by 2014 and add 12 million jobs each year, finance minister Pranab Mukherjee presented the Union Budget for this fiscal that hikes income tax exemption limit and steps up allocations for welfare schemes and infrastructure, while assuring high growth for the $1.2 trillion economy once again.

New incentives to farmers, 45 percent jump in funds for Bharat Nirman, India's flagship rural reconstruction programme, higher spending on urban development, fresh impetus on energy security and revival of the divestment programme were among the highlights of the 100-minute Mukherjee's budget.

He also announced that the national food security act will be enacted soon promising 25 kg of rice or wheat per month to the poor at Rs 3 per kg, while announcing a new health insurance scheme for those below the poverty line.

The income tax exemption limit for senior citizens was sought to be hiked by Rs15,000, while that for women and others was stepped up by Rs10,000. The 10 percent surcharge on personal income tax also was sought to be removed in Mukherjee's Budget presented in the Lok Sabha.

For India Inc, the corporate tax rate was kept unchanged, even as the finance minister sought to reduce the burden on industry by abolishing the commodities transaction tax, but hiked the minimum alternate tax to 15 percent of book profits.

Mukherjee also promised to scrap the fringe benefit tax to please corporates, introduce a pan-India goods and services tax from April next year and gave 100 percent tax deductions to political donations.

Dressed in a smart white bandgala suit, the 73-year-old politician - who had presented his last full budget as finance minister in the government of Prime Minister Indira Gandhi 25 years ago - said the United Progressive Alliance (UPA) government would push forward an agenda that will ensure 12 million new jobs each year and reduce poverty by half by 2014.

"The government also recognises the challenges," he said, referring to the global slowdown and the decline in India's high growth rate in the past year to 6.7 percent from over 9 percent in the preceding three years.

"The first challenge is to bring back the GDP (gross domestic product) growth rate to over 9 percent per annum," he said, setting the tone of what is his fourth career budget watched by Prime Minister Manmohan Singh and UPA chairperson Sonia Gandhi.

He said the other challenges included better governance and to ensure that the fruits of development reached across regions to touch the lives of every citizen - the 'aam admi' (the common man) as he called them.

Mukherjee said infrastructure would also be a priority, especially in areas like roads, highways and energy. "I, on my part, will ensure that sufficient funds are made available to these sectors."

The finance minister also said the unique identification plan, approved by the previous UPA government will be operational in 12-18 months and the process begin to hand over biometric smart cards to 1.17 billion citizens.

He said the total central government expenditure for the current fiscal year had been stepped up to Rs.10,20,800 crore, and compared it with Rs.193 crore that was set aside in the country's first budget over six decades ago.

Mukherjee said with industry still under the grip of global recession, the finance minister said he was providing additional incentives in the form of both direct and indirect taxes.

He enhanced the customs duty on items like set-top boxes, LCD televisions and premium textile goods to encourage domestic production and value addition.