While presenting the government's budget to Parliament today, Mr Chidambaram said, "Recent incidents have cast a dark shadow." Describing the safety and dignity of women as a collective responsibility, he said, "We stand in solidarity with our girl children and women."
Speaking to NDTV after Mr Chidambaram's announcement, the student's father thanked the government for the initiative. "The fund being set up in her memory is an honour for us. Hope it helps women in need," he said.
In December, the physiotherapy student and a male friend boarded a bus in South Delhi after watching The Life of Pi at a mall. Both were hit with an iron rod by a gang of men, including the alleged bus driver. The student was gang-raped and her friend and she were then thrown onto the road, where a passerby saw them and phoned the police for help.
The student fought for her life in a Delhi hospital, before the government flew her with her parents on an air ambulance to Singapore, where she died in a hospital there on December 29.
The assault provoked large and near-daily rallies in many cities, with students taking the lead in Delhi, demanding better policing and safety for women.
Six men have been arrested for her gang-rape and murder. Five of them are being tried at a special fast-track court in Delhi. The sixth, who is 17, is being tried by a juvenile court.
The student's identity has been protected for legal reasons. Sections of the media had referred to her as "Nirbhaya" or "fearless".
"I announce the setting up of the Nirbhaya Fund of Rs 1,000 crore. I request the ministry of women and child development to plan the structure, scope and application of this fund," the Mr Chidambaram said.
"Young women face gender discrimination everywhere, especially at the work place. Ministry of Women and Child Development has been asked to design schemes that will address these concerns. I propose to provide an additional sum of Rs 200 crore to that Ministry to begin work in this regard," he added.