Bangalore: Taking a step forward to develop the government securities and corporate bond markets, the government on Thursday increased the Foreign Institutional investor limit for government securities to $10 billion from $5 billion, for corporate bonds the FII limit has been increased to $20 billion from $15 billion. In addition, the government has raised the FII cap in bonds floated by companies engaged in the infrastructure business, which will provide much-needed funds for the crucial sector. The caps were raised as FIIs are close to reaching the existing cap of $20 billion, having invested over $17 billion in Indian papers. Finance Minister Pranab Mukherjee said the move will help enhance the flow of FII funds into debt markets. The government allowed FIIs to invest up to $5 billion more in both government bonds and corporate papers, after they reach the current cap of $5 billion and $15 billion in the two instruments, respectively. In addition, FIIs can additionally invest $5 billion in bonds of infrastructure companies and government bonds with a residual maturity of over 5 years. "The government has increased the current limit of FII investment in government securities by $5 billion, raising the cap to $10 billion and the incremental limit of $5 billion be invested in securities with residual maturity of over five years," an official statement said. It further added that the current limit of FII investment in corporate bonds has also been increased by $5 billion, raising the cap to $20 billion. The FII limit in corporate bonds with residual maturity of over five years issued by companies in the infrastructure sector would also be increased by $5 billion. Mukherjee said, "This is a welcome announcement and I do hope that the handicap which FIIs are facing will be removed considerably and there will be more of a flow to the capital markets." With the Bombay Stock Exchange benchmark Sensex crossing the 20,000 points mark on Tuesday, a correction may come anytime in the stock market, according to brokers. In fact, the Sensex has shed 140 points in the next two days. If a correction happens sharply, the debt market is expected to witness greater inflows from FIIs. The statement said the move would provide avenues for increased FII in debt securities and would help investment in the infrastructure sector and the development of government securities and corporate bonds markets. The decision was made, the statement said, in view of India's growing "attractiveness as an investment destination and the need for additional financial resources for the country's infrastructure sector, while at the same time balancing the monitoring policy." Earlier in the day, the Finance Minister said infrastructure bottlenecks, particularly power, would be a challenge to 9-10 percent economic growth in the country.