The Hindu Business Line : Chidambaram for more depth in capital market

Industry & Economy - Industry Associations
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Chidambaram for more depth in capital market — `More cos must be listed on SEs'

Our Bureau

New Delhi , Oct. 21

THE Finance Minister, Mr P. Chidambaram, today called for greater depth in the capital market by suggesting that more public and private companies should be listed on the country's stock exchanges to enable their performance to be judged by the capital market.

In his inaugural address at the 85th Annual General Meeting of Assocham here today, Mr Chidambaram said that more shares should be available for trading on the exchanges, while pointing out that large part of equity of companies (both public and private) is not available for trading. "Even in the private sector if promoters and associates hold large stocks, then such stocks are virtually non-traded," he said.

Mr Chidambaram said that the market was the best judge of economic activity in the same vein as the ballot box was the ultimate judge for performance of the Government. He pointed out that a non-traded company is not adequately judged or rewarded or punished by the market. "It is only in companies where there is active trading in bulk of its stocks that can be really judged by the market," Mr Chidambaram said.

`China 10 years ahead of us': Referring to his recent visit to China, he pointed out that the Government of that country had recently announced a programme to make $270 billion worth of State-held stocks publicly traded.

"This is biggest shake up of ownership since 1990, by making all Chinese shares tradable, the Chinese Government aims to raise funds to plug pension shortfall, increase private ownership of companies and make managements more accountable to shareholders. We too have a pension shortfall. These goals apply to the Indian public and private sector too," he said.

Mr Chidambaram felt that the level and pace of economic activity within the country should be stepped up to ensure that the existing gap between India and China is reduced.

"China is clearly at least ten years ahead of us in infrastructure and manufacturing. They are growing at a furious pace. We are growing at a satisfactory pace. If we don't do more and that too in double quick time, then I am afraid the gap between China and India will increase."

He said that China was catching up with India in areas where "we think we have an edge like banking, accounting and software".

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