India unveiled a bigger budget of 39.45 trillion rupee ($529.7 billion) for the coming fiscal year on Tuesday, stepping up investment on highways to affordable housing to put growth on a firmer footing as the economy recovers from the pandemic.

The government has projected slower economic growth of 8 percent to 8.5 percent compared with an estimated 9.2 percent for the current fiscal year. GDP contracted 6.6 percent the previous year.

Indian finance minister Nirmala Sitharaman announced spending of 200 billion rupees for a highway expansion programme and said 400 new trains would be manufactured over the next three years.

For the next fiscal year, India is targeting a deficit of 6.4 percent of GDP, hoping to build on higher tax revenues and privatization of state firms including a share sale of giant insurer Life Insurance Corporation.

Prime Minister Narendra Modi's government has made building of physical and digital infrastructure a top priority to improve the cost of doing business.

Sitharaman said the central bank would introduce a digital currency in the next fiscal year using blockchain and other supporting technology.

"Introduction of a central bank digital currency will give a big boost to the digital economy. A digital currency will also lead to a more efficient and cheaper currency management system," Sitharaman said.

India's central bank has voiced "serious concerns" around private cryptocurrencies on the grounds that these may cause financial instability.