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To justify my presence here, let me take this opportunity to mention some of the recent developments, which should be kept in view in the deliberations of the conference.

First, under the provisions of the Fiscal Responsibility and Budget Management Act, 2003, the Reserve Bank will not be participating, in the normal circumstances, in the primary market for the government securities from the start of 2006-07. The Technical Group that I referred to is currently working on the operational, technological and institutional aspects of this. Hence, the market perspectives on the implications of this development can best be articulated in the conference today.

Second, the Twelfth Finance Commission has made certain recommendations, which would mean that the State Governments would approach the market instead of obtaining loans from the Government of India. Several operational and other issues will have to be addressed in the management of the borrowing programme of the State Governments, in future. We are convening a Conference of the State Finance Secretaries on 8th April 2005, which will be addressed by Dr. C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister and the former Chairman, Twelfth Finance Commission, to discuss these issues. The road map that this Conference would indicate in this regard will be helpful for our discussions and further policy formulation in regard to debt-papers of the State Governments.

Third, the Central Government budget has proposed a Special Purpose Vehicle (SPV) for raising resources for investment in infrastructure. The issuance of debt-paper with relatively longer maturity, outside the Government of India's normal borrowing programme, is yet another recent dimension added to the debt-market developments in the country.

Finally, several legislative changes on the anvil provide new opportunities for further development of fixed income markets. For example, the long awaited Government Securities Bill is at an advanced stage of processing. The Finance Minister, in his budget speech, announced the intention of the Government to bring about amendments to the RBI Act and the Banking Regulation Act and the amendments relating to statutory pre-emptions could have implications for fixed income markets.

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* Inaugural Address by Dr. Y. V. Reddy at the Fixed Income and Money market & Derivatives Association of Indian and Primary Dealers Association of India delivered on March 11, 2005 at Mumbai.