Budget speech 2006-07: Full text

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55. I had proposed major initiatives in respect of micro finance in the last Budget. RBI has since issued guidelines to enable banks to appoint banking correspondents and banking agents. A window to access ECB funds has also been opened. A Bill to provide a formal statutory framework for the promotion, development and regulation of the micro finance sector will be introduced in this session.

56. The Self Help Group (SHG) movement is making rapid strides. In the two years of the UPA Government, we have credit-linked 801,000 SHGs. The credit disbursed to these SHGs is approximately Rs.4,863 crore. I propose to ask the banking sector to credit-link another 385,000 SHGs in 2006-07. I shall also ask NABARD to open a separate line of credit for financing farm production and investment activities through SHGs.

57. The findings of the NSS 59th Round (2003) reveal that out of the total number of cultivator households only 27 per cent receive credit from formal sources and 22 per cent from informal sources. The remaining households, mainly small and marginal farmers, have virtually no access to credit. With a view to bringing more cultivator households within the banking fold, I propose to appoint a Committee on Financial Inclusion. The Committee will be asked to identify the reasons for exclusion, and suggest a plan for designing and delivering credit to every household that seeks credit from lending institutions.

Horticulture and Fisheries

58. The PPP model will be employed to set up model terminal markets in different parts of the country. A sum of Rs.150 crore has been earmarked for this purpose in 2006-07 under the National Horticulture Mission. A Central Institute of Horticulture will be established in Nagaland. The National Fisheries Development Board will be constituted shortly.

VII MANUFACTURING

Employment

59. The two sectors which have the potential to create a large number of jobs are manufacturing and services. In manufacturing, we have identified some industries which, with appropriate incentives, can throw up huge job opportunities. These include textiles, food processing, petroleum, chemicals and petro-chemicals, leather, and automobiles. In services, tourism and software can offer a large number of jobs.

Textiles

60. The last two Budgets have created an enabling environment for the growth of the textile industry, especially cotton textiles. There has been an encouraging response to the Technology Upgradation Fund (TUF) scheme. I propose to enhance the allocation from Rs.435 crore to Rs.535 crore next year. The Scheme for Integrated Textiles Parks (SITP) was launched in October 2005 with the intention of creating 25 textile parks. As on date, 7 parks have been sanctioned and 10 parks have been identified for development. I propose to provide Rs.189 crore for this scheme.

61. Government proposes to launch the Jute Technology Mission in 2006-07 to harness the potential of the golden fibre. A National Jute Board will be established. I propose to make a token provision with the assurance that the funds required will be made available once the outlay is finalized.

Handlooms

62. Several schemes, including schemes for life insurance and health insurance, were announced in the last Budget for the handloom sector. They are being implemented. The Cluster Development approach will continue. It is proposed to cover an additional 100 clusters at a cost of Rs.50 crore in 2006-07. Yarn depots will be established in different parts of the country to ensure uninterrupted supply of yarn to weavers. Just as ‘woolmark’ has gained recognition, it is proposed to launch a ‘handloom’ mark. A scheme similar to TUFS will be introduced for the handloom sector to provide interest subsidy on term loans. I propose to increase the provision for the handloom sector from Rs.195 crore to Rs.241 crore next year.

Food Processing Industry

63. Recognizing the enormous benefits that the food processing industry can bring to agriculture and job creation, and to consumers, food processing will be treated as a priority sector for bank credit. NABARD will create a separate window with a corpus of Rs.1,000 crore for refinancing loans to the sector, especially for agro-processing infrastructure and market development. Government will also set up the National Institute of Food Technology Entrepreneurship and Management. The Paddy Processing Research Centre at Thanjavur will be developed into a national-level institute.

Petroleum, Chemicals and Petro-chemicals

64. Petroleum, chemicals and petro-chemicals (PC&P) is a sector with potential for large investment and employment. In order to promote investment in this sector, Government has set up a Task Force to facilitate the development of large PC&P Investment Regions. World class developers and investors are being associated with the Task Force. It is expected that in 2006-07 at least three such Investment Regions will be developed.