Developing bond markets to diversify long-term development finance: country study of India
By: Thorat, Usha.
Material type:
ArticlePublisher: 2002Description: p.45-63.Subject(s): Financial markets - India | Financial markets
In:
Asia-Pacific Development JournalSummary: The pattern of economic development adopted by India was essentially based on centralized planning with a predominant role given to the public sector. Public sector banks and financial institutions, which accounted for nearly 75 to 80 per cent of financial intermediation, contributed to the development process in the public sector by way of captive investments in government securities and lending to public sector entities. Rates of interest on government debt were administered and the rate of interest on central bank financing was hugely concessional. Exposure to external capital flows was limited. In such a milieu, there was hardly any development of the debt market. To move away from administered interest rates and reducing the reliance of government on high statutory pre-emption and its monetization of the budget deficit were the focus of reforms in the early 1990s. Against this background in section I, the current status of the debt market is described in section II. Section III contains an assessment of the various issues regarding development of debt markets in India while section IV concludes by analysing what more needs to be done. - Reproduced.
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Articles
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Indian Institute of Public Administration | Volume no: 9, Issue no: 1 | Available | AR53829 |
The pattern of economic development adopted by India was essentially based on centralized planning with a predominant role given to the public sector. Public sector banks and financial institutions, which accounted for nearly 75 to 80 per cent of financial intermediation, contributed to the development process in the public sector by way of captive investments in government securities and lending to public sector entities. Rates of interest on government debt were administered and the rate of interest on central bank financing was hugely concessional. Exposure to external capital flows was limited. In such a milieu, there was hardly any development of the debt market. To move away from administered interest rates and reducing the reliance of government on high statutory pre-emption and its monetization of the budget deficit were the focus of reforms in the early 1990s. Against this background in section I, the current status of the debt market is described in section II. Section III contains an assessment of the various issues regarding development of debt markets in India while section IV concludes by analysing what more needs to be done. - Reproduced.
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