One of the roadblocks or areas of improvement which is being seen in India’s growth is the financial sector. It is argues that much needs to be done for the development of this sector and that reforms in this sector is one of the essentials for sustaining the Indian growth story. I have read some reports on the outlook for India from various sources and no one has failed to cover this topic extensively. They have given quite a detailed view on how things should progress and what are the milestones involved.
I am not too sure about all their recommendations and whether they would be helpful or detrimental for the country. But I agree on the broader issue of the need for newer policies for the financial sector. And I also believe that things are being done, though one can argue on the speed and amount.
I think SEBI has been playing its role rather well in this scheme of things. I keep on hearing newer guidelines being issued with respect to various market participants at regular intervals. Be it the issue of independent directors (Clause 49) or that of the participatory notes (P-notes), it has been bold and has done things keeping in mind the long term sanity of the market. I appreciate their initiatives as much for their intention as for the fact that such bold moves are not very frequent in a country like ours.
They have recently come up with a rule regarding insider trading. Not going into details, I suppose that they have taken a preemptive step. One thing to note here is that there was no urgency to do anything on this issue. Any urgency is felt only after a market scam related to the issue happens. However, according to the NSE Factbook, more than half of India’s equity shares are held by corporate insiders. As such, I think what they are trying to do is address as many issues as possible without actually somebody feeling an immediate need.
By doing this they are essentially dealing with two macro topics. One is to avoid having this Bull Run end with some kind of a huge scam, just as it has happened previously. Second is that SEBI wants to do its bit for ensuring that the rise of the financial sector continues unabated. A special mention for SEBI’s chairman M Damodaran is necessary for a lot has happened during his tenure.Finally, some food for thought (sent to me by a friend)
Indeed, our measurement of GDP and poverty looks absurd when we consider matters of life and death. If a young couple has two children, per capita income is halved. That shows up statistically as an economic disaster that possibly pushes the couple below the poverty line. Yet, the couple will feel doubly blessed by their two children, not impoverished at all.
If on the other hand, the couple owns a cow that gives birth to a calf, statisticians will record that as a jump in their income. Our conventional way of measuring GDP per head regards the birth of a calf as a blessing, but the birth of a child as a tragedy. Further, the death of a calf is a tragedy (since it reduces measured wealth) but the death of a child is a boon (since it raises income per capita). How farcical!
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