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Capital market plays
an extremely
important role in
promoting and
sustaining the
growth of an
economy. It is an
important and
efficient conduit to
channel and mobilize
funds to
enterprises, and
provide an effective
source of investment
in the economy. It
plays a critical
role in mobilizing
savings for
investment in
productive assets,
with a view to
enhancing a
country's long-term
growth prospects,
and thus acts as a
major catalyst in
transforming the
economy into a more
efficient,
innovative and
competitive
marketplace within
the global arena.
In addition to
resource allocation,
capital markets also
provide a medium for
risk management by
allowing the
diversification of
risk in the economy.
A well-functioning
capital market tends
to improve
information quality
as it plays a major
role in encouraging
the adoption of
stronger corporate
governance
principles, thus
supporting a trading
environment, which
is founded on
integrity.
Capital market has
played a crucial
role in supporting
periods of
technological
progress and
economic development
throughout history.
Among other things,
liquid markets make
it possible to
obtain financing for
capital-intensive
projects with long
gestation periods.
This certainly held
true during the
industrial
revolution in the
18th century and
continues to apply
even as we move
towards the
so-called "New
Economy".
The existence of
deep and broad
capital market is
absolutely crucial
and critical in
spurring the growth
our country. An
essential imperative
for India has been
to develop its
capital market to
provide alternative
sources of funding
for companies and in
doing so, achieve
more effective
mobilization of
investors' savings.
Capital market also
provides a valuable
source of external
finance.
For a long time, the
Indian market was
considered too small
to warrant much
attention. However,
this view has
changed rapidly as
vast amounts of
international
investment have
poured into our
markets over the
last decade. The
Indian market is no
longer viewed as a
static universe but
as a constantly
evolving market
providing attractive
opportunities to the
global investing
community.
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