Small Scale Industry
Investment in Industry
Develop North East
Estimates for 1998
Assistance to States
Non Plan Expenditure
44. I am proposing a number of measures to
strengthen our capital markets:
The Securities and Exchange Board of India (SEBI) has approved the introduction of trading
in stock index futures as a way of providing greater opportunities for hedging and
inducing more liquidity into the market. The government will bring forward the necessary
amendment to the Securities Contracts (Regulation) Act to enable derivative instruments to
be treated as securities.
Foreign institutional investor(FII) debt funds are today allowed to invest only in listed
debt securities. I propose to allow them to invest in unlisted domestic debt securities
also; the risk of default would be borne by the FIIs.
To encourage modernisation of broker services, a one time permission was given last year
to stock brokers to corporatise their businesses without attracting capital gains tax. I
propose to extend this exemption by one year.
To encourage more primary public issues, I am proposing certain changes to expand the
income tax deductibility of expenses incurred on public issues.
After some of the turbulent events in the stock markets in recent years, a special effort
must be made to restore the confidence of small investors. I am asking SEBI to devote
special attention to strengthening the institutional arrangements for protecting small
investors from defaults and financial failures of brokers and other market intermediaries.