Modi's government, in office for less than two months, said it would raise caps on foreign investment in the defence and insurance sectors, and launch a tax reform to unify India's 29 federal states into a common market.
Delivering his maiden budget, Finance Minister Arun Jaitley told parliament that India's 1.2 billion people were "exasperated" after two years of economic growth below 5 percent.
He vowed that Asia's third largest economy would expand at an annual rate of 7-8 percent within three to four years.
"We shall leave no stone unturned in creating a vibrant and strong India," Jaitley, 61, told lawmakers after climbing the steps of parliament and showing his budget briefcase to TV cameras.
Modi, 63, won a landslide general election victory in May with a pledge to create jobs for the 1 million people who enter India's workforce every month.
He has since warned that "bitter medicine" is needed to nurse the economy back to health from high inflation and the worst slowdown since free-market reforms in the early 1990s unleashed an era of rapid growth.
At the same time, Jaitley vowed to adhere to the "daunting" budget deficit target - of 4.1 percent of gross domestic product for the fiscal year ending March 2015 - that the government inherited from its predecessor.
"I have decided to accept this challenge - one fails when one stops trying," Jaitley told a hushed lower house of parliament. He said the budget deficit would be reduced to 3.6 percent in the following two fiscal years.#BudgetExpress Tweets
Jaitley's commitment to fiscal discipline was stronger than many independent economists had expected. With the deficit already approaching half of the annual target just three months into the fiscal year, they expected him to raise the borrowing target to 4.4 percent for the current fiscal year.
"Fiscal prudence is of paramount importance," Jaitley said. "We cannot leave behind a legacy of debt for our future generations."
The government's other major policy initiatives had been broadly flagged in advance.
Jaitley said he wants a solution by December on how India would impose a national Goods and Services Tax (GST), promising that the government would be "more than fair" in its dealings with the country's states on how revenue would be allocated.
He also said he would set up a high-level committee to review retrospective tax claims blamed for choking off foreign investment after companies such as Britain's Vodafone were hit with massive demands.
Jaitley raised limits on foreign investment in defence and insurance ventures to 49 percent from 26 percent. Foreign defence contractors had sought a higher threshold to justify sharing technology when they site operations in India, a major arms buyer.
The budget for the fiscal year to March 2015 was delayed by this year's general election, which handed Modi's Bharatiya Janata Party (BJP) the strongest electoral mandate in India in three decades.Tweets by @CRISILLimited