India's Bond Market: A Giant Leap Needed for Economic Growth

India's bond market must expand sevenfold to support growth, increase liquidity, and broaden investor bases, as highlighted by NITI Aayog's CEO BVR Subrahmanyam. The report outlines systemic obstacles and suggests a six-year plan to enhance market infrastructure, regulation, and innovation for substantial growth.

The Indian bond market, currently just one-seventh the size of the nation's equity markets, must expand significantly to support the country's burgeoning economic ambitions. This was the central theme of a recent comprehensive report unveiled by BVR Subrahmanyam, CEO of NITI Aayog. The report posits that a sevenfold expansion is crucial to providing necessary financing options and achieving a global scale in economic infrastructure.

At the release of "Deepening the Corporate Bond Market Report," Subrahmanyam emphasized the stark contrast between India's burgeoning equity markets and its comparatively lagging bond market. While the United States boasts a bond market larger than its equity markets, India's corporate debt predominantly comes from banks, limiting broader access to stable, long-term financing.

The report identifies several regulatory and infrastructural impediments stifling the growth of India's bond market. Complex regulations from SEBI, RBI, and the Ministry of Corporate Affairs create significant compliance challenges, while a skewed credit rating system limits diversification. Moreover, the existing market infrastructure is heavily bank-dominated, restricting the growth of non-banking players and limiting retail investor participation. To address these challenges, the report suggests a strategic six-year implementation plan, focusing on market reforms and technological innovations to invigorate bond issuance and investor access.

(With inputs from agencies.)