Indian lawmakers walk out of Parliament in protest over spiralling prices, as Budget looms

NEW DELHI (AFP) - Indian opposition lawmakers walked out of the opening session of the new Parliament on Monday in protest over spiralling prices, even as shares hit a record high ahead of the government's maiden budget.

The new right-wing government was attacked by lawmakers in the Lower House over surging food prices and a hike in fares on India's massive rail network.

The walkout by opposition MPs forced the lower decision-making house to adjourn early on the first day of sitting following a parliamentary recess. "We are protesting on behalf of the people. Inflation is a subject which touches the lives of every citizen," Mr Kamal Nath, a minister in the previous Congress party-led government, said after the walkout.

Prime Minister Narendra Modi's government, which came to power in May promising to revive a flagging economy, is expected to eschew overtly populist measures and stress financial discipline in the national budget slated to be released on Thursday.

The uproar in Parliament mirrored scenes under the previous government when Mr Modi's Bharatiya Janata Party (BJP), then in opposition, stalled debate.

Nonetheless, Indian stocks rose to a fresh high on Monday for the second time in less than a week.

Investors are betting that the government's first Budget will offer a credible series of steps to steer India from a subsidy-laden, bureaucratic culture to a more business-friendly investment climate.

Parliamentary Affairs Minister Venkaiah Naidu defended the BJP government, blaming India's stubbornly high inflation on the economic policies of the last government and a weak monsoon which has hurt crops and driven up food prices.

"You cannot make a one-month government responsible for all these price hikes," the minister told reporters outside Parliament.

The Bombay Stock Exchange's benchmark index, the Sensex, climbed as much as 0.62 per cent to a record 26,123.55 points before retreating marginally to end the day at 26,100.08 points.

Mr Harendra Kumar, head of brokerage Elara Capital in Mumbai, said investors were "looking at the budget as the start point of a continuous reform process".

The Sensex has risen more than eight percent since Mr Modi took office, even though analysts say the government will struggle to shrink a yawning fiscal deficit in the face of weak economic growth.

"We expect the main policy push to materialise only next year once the administration is firmly established and has dealt with near-term challenges such as poor rains," HSBC said in a note.

"Once adopted, it will also take some time before the reforms yield their expected growth dividend," it added.

Economic growth has slowed from near double-digits a few years ago to 4.7 per cent in 2013, hit by high interest rates, falling investment and wage-eroding inflation.

Headline wholesale inflation, the most widely watched price measure, is running at just over 5 per cent annually while consumer price inflation, which takes in a narrower basket of goods but has become increasingly important to policymakers, stands at 8.28 per cent year-on-year.

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