Revamping India's Debt Markets for Infrastructure and Climate Growth

The Economic Survey underscores the need for India to fortify its long-term debt markets to support infrastructure development and climate financing. Key barriers include shallow corporate bond markets and conservative investment practices. Proposed reforms include tax rationalization and enhancing municipal bond and securitisation frameworks.

India's economic blueprint calls for a strategic overhaul of its debt markets to meet the burgeoning needs of long-term infrastructure and climate financing. This recommendation was highlighted in the Economic Survey laid before Parliament ahead of the upcoming fiscal budget discussions.

The Survey scrutinizes the current landscape dominated by top-rated corporate bond issuers and identifies key impediments like limited securitisation practices and conservative policies among pension and insurance funds. It suggests comprehensive reforms including tax rationalization to bridge gaps between debt and equity instruments.

Further measures proposed include the creation of credit enhancement facilities, standardizing securitisation, and constructing a robust municipal bond mechanism. These initiatives aim to invigorate the secondary market, foster a competitive yet secure financial system, and facilitate sustainable capital market growth in India.

(With inputs from agencies.)