Manmohan Singh released the annual report of his United Progressive Alliance government at his 7 Race Course Road residence in the presence of UPA chairperson and Congress president Sonia Gandhi, party leaders and allies.

Rebuffing the opposition's criticism on various fronts, he vowed to prove critics wrong.

"We will be the first to say we need to do better. But let no one doubt that we have achieved much," the prime minister said in a brief speech in English.

With the government suffering from an image crisis triggered by a host of scams, the prime minister acknowledged that there is "public frustration and anger on the issue of corruption" and vowed "exemplary punishment" to the guilty.

"I wish to assure our people that we are working sincerely to address this issue through both legislative and administrative measures.

"Legislation is before parliament to establish a Lokpal, ensure time-bound delivery of goods and services and judicial accountability," he said.

"We are trying to ensure exemplary punishment to the guilty while also ensuring that public servants feel secure in taking bona fide decisions that are in the national interest."

Echoing Manmohan Singh, Gandhi stressed on the need for "transparent and accountable politics."

With an eye on the 2014 elections, Gandhi said the government will have to pursue inclusive economic growth to ensure more spending on social welfare programmes and asked the UPA combine to shun smugness and despondency.

Asking UPA colleagues to defeat negativity, the Congress chief asserted: "We will not let any body run down our achievements."

Saying internal security was "by and large been satisfactory", Manmohan Singh said the "scourge of Naxalism (Maoism) however continues to be a major problem".

But amid growing public wariness with soaring inflation and a host of problems, he showcased India's economic resilience and high growth rate as singular achievement of his government.

"Despite an adverse international environment, the (Indian) economy grew by about 7 percent in 2011-12, which is amongst the highest in the world," he said.

"Sustained high rates of growth during the UPA government's tenure have enabled us to pursue our agenda of inclusive and equitable growth.

"Poverty has declined at twice the rate that it did before the UPA government's tenure."

He said the Mahatma Gandhi National Rural Employment Guarantee Scheme now reaches one out of five households in the country," he said while highlighting key initiatives that aim to "bring succour to the aam admi".

The prime minister cited a 3.3 percent in agricultural growth rate, rise in rural wages, disbursal of Rs.200,000 crore to marginal and small farmers, record food production, new power generation capacity of 20,000 MW, and a near universal primary school enrolment as other highlights of the third year of the UPA-II.

"Despite these real achievements, there are uncertainties and a large unfinished agenda before us," he said.

Manmohan Singh gave his government a positive review on foreign policy, citing improving ties with neighbours, particularly Bangladesh, Pakistan and Myanmar.

The gathering at the prime minister's residence in the heart of the capital included senior leaders of the Congress as well as its allies who form the multi-party UPA.

Also present was Mulayam Singh Yadav, whose Samajwadi Party extends outside support to the UPA. But Trinamool Congress Mamata Banerjee and DMK chief M. Karunanidhi sent only representatives.

Manmohan Singh first became prime minister in 2004. His second five-year tenure began in 2009.

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