Budget speech 2006-07: Full text

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Keywords: 2006-07, Fm Speech

90. Important Bills to amend the banking laws and for setting up the Pension Fund Regulatory and Development Authority are before Parliament. The Standing Committee on Finance has recommended these Bills. I would urge Honourable Members to cooperate with the Government and pass these Bills.

Capital Market

91. In recent months, the capital market has attracted a great deal of attention. The measures taken in the last year-and-a-half have deepened, broadened and strengthened the market. It is necessary to take more measures. Hence, I propose to

• Increase the limit on FII investment in Government securities from $ 1.75 billion to $ 2 billion and the limit on FII investment in corporate debt from $ 0.5 billion to $ 1.5 billion;

• To raise the ceiling on aggregate investment by mutual funds in overseas instruments from $ 1 billion to $ 2 billion and to remove the requirement of 10 per cent reciprocal share holding;

• To allow a limited number of qualified Indian mutual funds to invest, cumulatively up to $ 1 billion, in overseas exchange traded funds; and

• To set up an investor protection fund under the aegis of SEBI, funded by fines and penalties recovered by SEBI. This will bolster confidence among retail investors who should be the key drivers of the capital market.

Consultations have been held in this behalf with RBI and SEBI, who will issue the guidelines in due course.

92. RBI had introduced the anonymous electronic order matching trading module called NDS-OM on its Negotiated Dealing System. In the first phase, RBI-regulated entities, banks and primary dealers were allowed to trade on the system. The system has now been extended to all insurance entities. In view of the encouraging response of market participants and to further deepen the Government securities market, it is proposed to extend access to qualified mutual funds, provident funds and pension funds.

93. In my Budget speech last year, I had appointed a high-level expert committee on corporate bonds. The committee has submitted its report and Government has accepted the recommendations. We shall now take steps to create a single, unified exchange-traded market for corporate bonds.

XI OTHER PROPOSALS

Research and Development

94. Our outstanding human resources have the capacity to make India a Knowledge Society. Government accords high importance to research and development. The National Agricultural Innovation Project for research at the frontiers of agricultural science is expected to receive multilateral assistance shortly, and will be launched in July, 2006.

95. The National S&T Entrepreneurship Board has set up a number of Technology Business Incubators with seed funding from the Technology Development Board. Government will be happy to provide enabling concessions to the incubatee-entrepreneurs.

Institutions of Excellence

96. Last year, I made a beginning with an unprecedented grant of Rs.100 crore to the Indian Institute of Science (IISc), Bangalore to help develop it into a world-class institution. I am happy to report that the IISc has obtained approval for an ambitious programme of modernization, and is implementing the same. This year, I must recognize another historical event. Three great Universities have entered their 150th year. These are the University of Calcutta, the University of Mumbai and the University of Madras. I propose to mark the beginning of the 150th year celebrations with a grant of Rs.50 crore to each University for a specified research department or a research programme in that University. On the conclusion of the year, I intend to make another grant of Rs.50 crore to each of them.

97. I propose to make the special grant of Rs.100 crore for an institution of excellence to a distinguished institution, the Punjab Agricultural University, Ludhiana, in acknowledgement of its pioneering contribution to the green revolution.