Indian Prime Minister Narendra Modi’s government is presenting its first full budget in what is seen as a key test of his appetite for reform.
Mr Modi won last year’s general elections on a promise to reform the economy and attract foreign investment.
Reports say that his government may slash food and fuel subsidies, helped by lower global oil prices.
India will grow at a rate of more than 8% during 2015-16, a key economic report said ahead of the budget.
The growth outlook follows the country’s new way of calculating GDP which has caused some confusion.
Mr Modi’s government produced an interim budget shortly after coming to power last year that was largely seen as a continuation of policies designed by the outgoing Congress party government.
Optimism has grown under Mr Modi, but the country is yet to see any of the big bang reforms he promised to revive the economy.
“This budget needs to leave a mark, just as the 1991 budget did when the economy was going through a major crisis,” DK Joshi, chief economist at local ratings agency Crisil, told the AFP news agency.
“There is a huge amount of expectation. And this is the critical time to deliver.”
Finance Minister Arun Jaitley is expected to raise spending on road, railways and electricity to make India a more attractive destination for foreign investment.
India’s Economic Survey, which is said to be the basis of the annual budget, has indicated that India can increase public investments to drive growth without borrowing more.
“India has reached a sweet spot and… there is a scope for Big Bang reforms now,” the report said.
The government would not overshoot its deficit target of 4.1% of gross domestic product (GDP) in the current fiscal year just ending, the report said.