Enhancing the Access and Liquidity of India's Bond Market for Economic Growth

Chief Economic Advisor V Anantha Nageswaran highlighted the need to facilitate mid-sized firms' access to the bond market. He emphasized increasing market liquidity and integrating domestic funding with foreign inflows. A dual-engine financing model involving both bond markets and traditional banks is pivotal for India's economic development.

In a recent address, Chief Economic Advisor V Anantha Nageswaran emphasized the necessity of broadening access to India's bond market for mid-sized companies. He pointed out the current dominance of large, well-rated firms and stressed the need for systematic, affordable entry points for smaller players in the debt market.

Nageswaran advocated for enhanced liquidity in the market and encouraged investors to move away from the practice of holding assets until maturity. He proposed a dual-engine financing approach combining bond markets and bank funding as essential for a burgeoning Indian economy. Domestic funding should act as the backbone, with foreign investments serving a supportive role, he stated.

Addressing the need for a recalibration in funding strategies, Nageswaran highlighted the stable, growth-oriented environment in India. This setting is exemplified by macroeconomic stability, strong banking infrastructure, and significant foreign reserves. Such fundamentals bolster investor confidence and contribute to India's inclusion in global government securities indices.

(With inputs from agencies.)