The Indian Finance Minister Mr Yashwant Sinha is in for a rough ride when he presents his "millennium" budget in parliament later this month, and not just from the opposition.

Already burdened by a slowing economy, a ballooning fiscal deficit and nuclear sanctions, Mr Sinha now faces dark mutterings of discontent from partners within the coalition government.

"The coalition partners are sharpening their knives and the finance minister has to take a political gamble when he prepares the budget," said Charan Wadhwa, an economist at the Centre for Policy Research.

"Subsidy cuts announced as a pre-budget move will help him ease the pressure a bit. But tough measures are still required."

The Indian government recently announced drastic cuts in subsidies on foodgrains, cooking gas and fertiliser in a bid to cut down on expenditure and narrow the fiscal deficit.

The move sparked an outcry from opposition groups as well as government allies, who accused the Hindu-nationalist BJP party - the dominant member of the coalition - of acting unilaterally.

Under heavy pressure from angry coalition partners, Prime Minister Atal Behari Vajpayee partially rolled backed the subsidy cuts, thus denying Sinha a substantial public spending saving.

Analysts say Sinha will be hard pushed to deny increased funding for the social services, which were hit by the US-led sanctions imposed after India conducted a series of nuclear tests last May.

"The worst effect of the sanctions may be behind us, but there is still cause for worry," said P.D. Kaushik, an analyst at the independent Rajiv Gandhi Foundation.

Direct foreign investment in the first half of the current fiscal year was $696 million, less than one quarter of the figure for the same period the previous year, according to industry figures.