Budget is widely seen as a test of Prime Minister Narendra Modi.
Pressure on the government increased with the Reserve Bank of India's surprise move on Thursday to cut interest rates
In cutting interest rates and giving a boost to the government's efforts to revive growth, RBI governor Raghuram Rajan displayed the pragmatism and flexibility familiar to those who work with him.
However, some analysts say RBI Governor Raghuram Rajan may delay the rate cuts amid mounting concerns over the government's fiscal health.
Food costs jumped up year-on-year.
Economist Arvind Panagariya has also argued for loosening deficit targets to boost capital spending
The government is now contemplating issuing an executive order to implement these measures, which would need to be approved by lawmakers within six weeks of the opening of the next session of parliament, scheduled for the beginning of February. India's president would also need to agree.
Modi orders coal, insurance sector reforms.
Modi, who was elected in May with a mandate to provide jobs and economic growth, has seen his reform agenda stymied by controversial statements by lawmakers in his party
Imports of machinery and transport equipment grew about 40 per cent month-on-month
India's industrial output unexpectedly contracted 4.2 percent year-on-year in October, dragged down by a fall in the manufacturing and the capital goods sector, government data showed on Friday.
The government holds stakes ranging from 56% to 84% in 27 state-run banks.
Official GDP data for the second quarter of the current fiscal year ending March are due to for release this Friday.
Rajasthan has taken the lead on structural reforms which could help India attract business and employ a fast-growing workforce.
In a speech, Jaitley said that while he expected to hit targeted levels for direct taxes, reaching the goal for indirect taxes would be a "challenge".
Road projects alone worth $10 billion face delays over land disputes and other clearances.
October shipments to India, the world's No.2 gold consumer behind China, jumped to about 150 tonnes from less than 25 tonnes a year earlier and 143 tonnes in September, a finance ministry official said last week.
India and the United States settled a dispute on Thursday that had paralysed the World Trade Organization and risked derailing a $1 trillion package of reforms.
It doesn't appear to be happening yet, even though India's stock market has been Asia's best performer this year.
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