Noting that finances of both the Central and state governments were under "severe strain", the President said that besides having inflationary potential, a rise in the aggregate general government deficit caused severe consequences for interest rates, investment and growth.

It was, therefore, critically important for both the Central and state governments, he said, to restore their financial health by reducing the revenue and fiscal deficits.

In his customary address to the joint sitting of both houses of parliament on the opening day of budget session, the President, however, lauded the performance of the economy against external and internal odds.

The economy faced a "very adverse" situation owing to the general slowdown in the global economy, which was compounded by many "inherited bottlenecks" in the domestic economy, the President said, adding that despite this, the economy has fared reasonably well and the gross domestic product growth rate is one of the highest among developing countries.

The rupee had also remained stable and was within a manageable exchange range despite considerable volatility in currency markets elsewhere, he said.

In his 16-page address, the President reiterated the Government's commitment to free industry from bureaucratic control and reforming public-sector undertakings through restructuring, rehabilitation, disinvestment, and strategic sale.

The Government, he said, accorded high priority to rapid development of infrastructure and made particular mention of the quadrangle project linking four metros. Sufficient resources would be mobilised for implementing it from multiple points in the country, Narayanan said.

Stating that information technology presented the single greatest developmental opportunity for the country, he said an action plan to make India a major centre for hardware design, manufacture, and exports was on the anvil. The Government also planned to unveil major initiatives to promote computer training and information-technology-based education, he said.

Narayanan said the new telecommunications policy would be finalised soon. A technological-upgradation fund to modernise the weaving and processing sectors of the textile industry would be launched from April 1, while the agriculture ministry would launch a cotton-technology mission, he said.

Regarding agriculture, the President said the Government was formulating a new national policy to strengthen the sector and agro-based industries. It will focus specifically on raising food production in the country's vast rain-fed areas, eastern and north-eastern regions, he said.

Stressing that management of prices of agricultural commodities was a critical need, Narayanan said that a bill to amend the Essential Commodities Act to check hoarding and black marketing more effectively would be introduced during the current session of Parliament.

The Insurance Regulatory Authority Bill, which has been referred to a parliament select committee, will also be tabled in the house to strengthen the insurance sector and enable it to seize opportunities of globalisation, he said.

Accession to the Paris convention for protection of industrial innovations and patents, President said, will improve the industrial climate by increasing information flow, provide better protection for Indian inventors and encourage technological development.

Referring to the power sector, the President said major advances were being made to remove bottlenecks in clearing many pending projects.

About subsidies, he said there should be a national consensus that electricity generation, transmission and distribution, being commercial activities, user charges should be recovered fully, and if there was any conscious decision to charge less, subsidies have to be provided by the concerned state governments in a transparent manner.

Ensuring the well-being of all citizens, the President said, was the first duty of any government, and investment in literacy, education, particularly primary education, health, sanitation, and drinking water was a major priority of the government as these determined the quality of life of the citizens and improved the country's standing in the human-development index.

Social-sector development was not dependent on increased financial resources alone, Narayanan said. Investment of better and more committed administrative and managerial resources was equally critical, he added, stressing there is a need to sensitise the government machinery both at Central and state levels.