Indian PM appeals to lawmakers to act 'responsibly'

Prime Minister Manmohan Singh's call came as lawmakers began a new session in which the government will unveil a budget that analysts believe will eschew populist measures in favour of reining in spending -- despite polls due in 2014.

Past parliamentary sessions have been stormy with opposition lawmakers accusing the left-leaning Congress administration of massive corruption, resulting in the passage of little legislation.

"The way we conduct financial business before parliament will be a crucial test of how we deal with the formidable challenges we face," Singh said, referring to an economy growing at a decade low and sharply deteriorating public finances.

"We look forward to responsible dialogue," he added.

India, the world's most populous democracy, is struggling to avert a ratings downgrade of its sovereign debt to junk status due to its worsening finances, with growth expected to be as low as 5.0 percent in the fiscal year to March 2013.

While enviable by sluggish Western standards, expansion is far below the near double-digit levels posted before the onset of the global financial crisis and inadequate to create the jobs needed to employ India's burgeoning population.

The government has already opened the aviation and retail sectors to wider foreign investment in the face of strong opposition. During this parliamentary session it plans measures to hike foreign investment in insurance and open the pension sector to overseas investors.

Underscoring hostility to the changes, public-sector banks and many factories across India were hit for a second day by a trade union strike called to protest against the reforms that labour leaders condemned as anti-poor.

Leaders of India's two main leftist parties boycotted the opening parliamentary session, saying they wanted to show solidarity with the strikers.

"The government must sit down with the workers and hear them out because it cannot afford to ignore this class any more with general elections due," Shubha Singh, an independent political analyst, told AFP.

The session kicked off with a speech by President Pranab Mukherjee outlining the government's agenda.

There are "gathering anxieties about the economic slowdown", Mukherjee said.

But he added that "recovery is likely" and said the government is determined to stick to its deficit targets.

Mukherjee also promised "greater transparency, probity, integrity and accountability in governance".

Singh's minority government fears its reform agenda could be derailed by opposition anger over new bribery allegations that surfaced this month involving the $748 million purchase of helicopters from Italian defence giant Finmeccanica.