India's IPO Challenge: Balancing Growth and Purpose

India’s Chief Economic Advisor, V Anantha Nageswaran, expresses concern over the current trend of IPOs mainly serving as exit strategies for early investors, which undermines public markets. This growing trend, amid a boom in share sales, calls for a strategic evolution in India's capital markets, emphasizing long-term investment and purpose.

India's Chief Economic Advisor, V Anantha Nageswaran, has flagged a concern over the increasing trend of initial public offerings (IPOs) being used primarily as exit avenues for early investors. Speaking at a CII event, he emphasized that this practice could undermine the foundational spirit of public markets.

Nageswaran highlighted that while India's capital markets have exhibited robust growth, measuring success by market capitalization and trading volume may divert savings from productive investments. He emphasized the importance of aligning capital market growth with long-term, purposeful goals.

The CEA noted that with over 55 IPOs worth nearly Rs 65,000 crore from April to September, most offerings were by existing investors, with negligible new share issuances. This trend underscores the need for a deeper bond market and strategic risk-taking to drive India's economic ambitions forward.

(With inputs from agencies.)