While presenting the state budget, B S Yediyurappa, deputy chief minister and finance minister of Karnataka, announced that Karnataka government would reduce the value added tax (VAT) on software licenses from 12.5% to 4% effective from April 1, 2007, and allot Rs 3 crore for the development of nano-technology.

Yediyurappa said, "Nano Technology is emerging as a new branch of science. This sector may open up new opportunities. To make a beginning in this direction, I propose to allocate Rs 3 crore. If need be, more funds will be allocated for this purpose later."

The government also plans to set up a disaster recovery centre for government records in Bangalore and Dharwad. According to Yediyurappa, "In order to provide better service to the public and further strengthen the existing initiatives, I propose to constitute Kaveri Monitoring Cell. I also propose to establish Data Storage and Disaster Management Centre at Bangalore and Dharwad for storage and preservation of permanent records."

Karnataka is also setting up a regional science centre in Dharwad and plans to launch district level science and technology centres, for which it has allocated Rs 5 crore.