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Budget will aim to address slowest pace of growth in four

years

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Economists expect tax cuts and further job creation

measures

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India seeking to preemptively lower tariffs to cope with

Trump

trade policies

By Shivangi Acharya

NEW DELHI, Feb 1 (Reuters) - Indian Prime Minister

Narendra Modi faces the challenges of reviving growth and giving

relief to a middle class hit by rising living costs, while also

preparing for an uncertain year of global trade, when his

government unveils its budget on Saturday.

Finance Minister Nirmala Sitharaman will present the budget

for the next fiscal year in parliament at 0530 GMT.

She may provide a policy boost for the world's fifth-largest

economy, which is expected to post its slowest pace of growth in

four years, amid frail urban demand and inflation risks fuelled

by a weak currency.

The slowing economy has rattled the equity market and led to

more Indians becoming less hopeful about their quality of life

under Modi's rule.

Economists expect the budget to ease the burden on

individuals through tax cuts on income and energy products and

to build on the $24 billion programme of job creation schemes

announced in the first post-election budget in July.

DEREGULATION DRIVE

Speaking before the start of Friday's parliamentary session,

Modi said the budget "will give new faith and trust" to the

country, without giving any hints of the steps that would be

taken to shore up economic growth.

"We expect the government to unveil targeted

growth-supportive fiscal policies, with minimum disruption to

the fiscal consolidation roadmap," said Sonal Varma, economist

at Nomura.

The government is expected to slightly better its fiscal

deficit target for the current year, while lowering it to below

4.5% in the coming year that begins on April 1.

The country's chief economic advisor, in a report released

on Friday, forecast India's economy would remain sluggish in the

next fiscal year and advocated long-delayed reforms in areas

such as land and labour to boost medium-term growth.

While near-term growth is in line with the 10-year average,

India needs a growth rate of 8% to meet its longer term economic

goals and create enough jobs for its large, youthful population.

For this, Indian states, along with the centre, must pursue

systematic deregulation as a priority, the survey said. Areas in

which regulations need to be eased range from land to labour and

factories, it said.

India lags its own target to be a $5 trillion economy by

2025. Modi aims for the nation to be a developed economy by

2047.

BRACING FOR TRUMP'S TARIFFS

India will also have to cope with possible global

disruptions from U.S. President Donald Trump's trade policies.

India is trying to preemptively lower tariffs on goods to save

itself from Trump's threatened tariffs.

To align with Trump's "America First" policy, Reuters

reported India was ready to offer more incentives such as tax

cuts and land access to U.S. companies in industries such as

semiconductors and electronics.

Modi is expected to discuss these issues with Trump later in

February.

The lowering of tariffs on some of the goods could be part

of the budget too, with India seeking to take advantage of

U.S.-China trade tensions to increase its own share of global

supply chains.

The list is likely to include components for mobile phone

assembly such as printed circuit board assembly, parts of camera

modules, and USB cables, sources have said.

(Editing by Alex Richardson)