Manmohan Singh, speaking behind a bullet-proof screen in driving monsoon rains, stressed there was no "magic wand" to eradicate the problem of graft but he promised a multi-pronged approach.
He pledged greater transparency in government, a more effective justice system, a new law on public procurement and a powerful new ombudsman tasked with investigating and prosecuting corrupt officials.
"We are taking the strictest possible action in cases of corruption that have surfaced," Singh said from the ramparts of New Delhi's 16th-century Red Fort.
Over the last year, a former telecom minister in Singh's government has been arrested and another has resigned over the flawed sale of telecom licences in 2008.
Meanwhile, the former head of last year's Commonwealth Games faces trial for embezzlement, while the chief ministers of two Indian states have resigned over land and mining scandals respectively.
"Today, the world recognises our potential to be one of the major economic powers globally. But the problem of corruption is a big obstacle in such a transformation," Singh warned.
Police and soldiers were out in force across India on Independence Day, which celebrates the end of British colonial rule on the subcontinent, as security was ramped up.
A senior home ministry official said security measures were being increased in New Delhi, Bangalore, Chennai and Kolkata, as well as Mumbai, where police are probing triple bombings on July 13.
The three co-ordinated explosions killed 26 people and injured 130, but no group claimed responsibility and detectives have struggled to unearth who was behind the attack.
"Last month's terrorist attacks in Mumbai warn us that there cannot be any slip up in our vigilance as far as the fight against terrorism is concerned," Singh said, echoing President Pratibha Patil in her customary address on the eve of Independence Day.
Heavily-armed commandos backed by snipers and rapid-action squads guarded the Red Fort in the crowded centre of Delhi.
Security was also raised in insurgency-hit Kashmir and India's seven restive northeastern states including Manipur, where several separatist groups have called for a boycott of Monday's celebrations.
Elsewhere during his address, Singh promised unspecified action on inflation, which is inching back up towards double digits, causing huge hardship to the poor.
"Finding a solution to this problem will be our top-most priority in the coming months," he said.
He also issued a rallying call for businesses to create jobs for the aspirational young, warning politicians not to stand in the way of factories or development projects for short-term political gains.
"We should all stay away from politics that create suspicion or apprehension amongst those connected with industry, business and investment," he said.
He acknowledged, however, that the government had a duty to ensure that inequalities in wealth did not cause social problems.
"It is not an ordinary achievement for our democracy with a population of 120 crore (1.2 billion) and so many religions, languages and cultures to march rapidly ahead on the path of development," he said.
"But we must ensure that inequalities do not increase even as we develop rapidly."
-AFP/ac
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