Budget speech 2007-08: Full text

FM'S SPEECH: Chidambaram said that there were many pluses and a few minuses, both of which he dealt with in his speech candidly.

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Public Private Partnership and Viability Gap Funding

The Public Private Partnership (PPP) model has enabled greater private sector participation in the creation and maintenance of infrastructure. So far, under the viability gap funding scheme, 37 proposals have been received of which 21 proposals have been granted 'in-principle' approval with a total project cost of Rs 9,842 crore and an estimated viability gap funding of Rs.2,521 crore. The pace is slow, and there is a need to adopt a more aggressive approach for preparing a shelf of bankable projects that can be offered for competitive bidding.

Apart from the steps already taken for capacity building and engaging consultants, I intend to set up a revolving fund with a corpus of Rs.100 crore to quicken project preparation. The fund will contribute up to 75 per cent of the preparatory expenditure in the form of interest free loan that will be eventually recovered from the successful bidder. Guidelines for operating the fund will be announced in due course.

INDUSTRY

Petroleum and Natural Gas

Energy security is high on the Government's agenda. In the six rounds of New Exploration Licensing Policy (NELP) so far, 162 production sharing contracts have been awarded. Indian and foreign companies have already made an investment of Rs 97,000 crore in exploration. Similarly, after three rounds of bidding, 23 coal bed methane blocks have been awarded for exploration.

Textiles

A rejuvenated textile industry is geared to meet the global challenge. 26 parks have been approved so far out of 30 sanctioned under the Scheme for Integrated Textiles Parks (SITP). I propose to increase the provision for these parks from Rs 189 crore in 2006-07 to Rs 425 crore in 2007-08.

I am also glad to announce that the Technology Upgradation Fund (TUF) scheme will be continued during the Eleventh Plan. Against a provision of Rs 535 crore in 2006-07, I propose to provide Rs.911 crore in 2007-08. As before, handlooms will be covered under the TUF scheme.

Handlooms

A cluster approach for the development of the handloom sector was introduced in 2005-06 and 120 clusters have been selected. 273 new yarn depots have been opened in the current year and the Handloom Mark was launched. Government proposes to take up an additional 100-150 clusters in 2007-08. The 12 schemes that are now implemented will be grouped into five schemes in the Eleventh Plan period. The health insurance scheme has so far covered 300,000 weavers and will be extended to more weavers. The scheme will also be enlarged to include ancillary workers. I propose to enhance the allocation for the sector from Rs 241 crore in 2006-07 to Rs 321 crore next year.

Small and Medium Enterprises

Following the credit policy for small and medium enterprises (SME) announced in August 2005, outstanding credit to the SME sector increased from Rs 135,200 crore at end December 2005 to Rs 173,460 crore at end December 2006. While encouraging banks to lend more to the SME sector, I propose to ask banks to have regard to the credit rating acquired by an SME while fixing the interest rate.

Coir Industry

Coir is an eco-friendly fibre. The coir industry provides employment to a large number as well as earns valuable foreign exchange. I am happy to announce a scheme for the modernisation and technology upgradation of the coir industry with special emphasis to major coir producing States such as Kerala, Karnataka, Tamil Nadu, Andhra Pradesh and Orissa. I propose to make a provision of Rs 22.50 crore.

SERVICES SECTOR

Foreign Trade

Our merchandise exports crossed the milestone of US$100 billion in 2005-06 and are expected to cross another milestone of US$125 billion by the end of the current fiscal. Foreign trade is growing at a rate more than twice the growth rate of GDP. Government will continue to follow export friendly policies.