It is estimated that India needs to spend around $1 trillion in the next Five-Year Plan period (2012-2017) for upgrading and creating physical and social infrastructure to support the economy and to achieve double-digit growth in the coming decade.

This is a huge amount of money, by any standards, and the key question is how are we going to raise the required financial resources?

It is in this context that the creation and further deepening of a vibrant debt market is imperative.

The country's retail investors would participate in large numbers (similar to the equity market) only when the debt market is broad-based and a variety of debt instruments are available.

Also, it is important to remove or rationalise stamp duty, transaction taxes and other legal/ documentation fees and charges in order to bring down transaction costs across the board, and to simplify the whole process of securitisation of tradable securities.

The role played by international rating agencies in the residential mortgage-backed securities market in the United States and other developed economies, one that triggered the global financial meltdown, is still fresh in the memory of institutional investors.

Strict compliance with prudential measures and a high standard of corporate governance are prerequisites for the healthy growth and sustainability of debt markets in India.

Subramanya C

Vice-Principal

SIBSTC, Bangalore

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