Measures on anvil to boost corporate bond market
The Finance Ministry on Friday said it will soon announce measures to deepen India's corporate bond market with a view to provide additional source of funding for infrastructure sector projects.
New Delhi: The Finance Ministry on Friday said it will soon announce measures to deepen India's corporate bond market with a view to provide additional source of funding for infrastructure sector projects.
"We are examining what needs to be done to deepen the corporate bond market. They (steps) are all on the anvil. We are looking at them and we will be announcing those which are feasible very quickly," Economic Affairs Secretary Arvind Mayaram told reporters on sidelines of an infrastructure investment conference.
While India has a very advanced G-sec (government securities) market, the corporate bond market is relatively underdeveloped.
The size of the Indian corporate bond market at 11.8 percent of GDP is lower than the average for Emerging East Asia and for Japan at 17.2 and 19.8 percent, respectively.
A well-developed corporate bond market provides additional avenues to corporates for raising funds in a cost effective manner and reduces reliance of corporates on bank finance.
Referring to Exchange Traded Funds (ETFs), which can be used for funding infrastructure, Mayaram said they are yet to take off in a big way.
"There haven't been many takers except in gold ETFs. There haven't been many takers for infrastructure ETFs, therefore we need to encourage infrastructure ETFs to be able to provide long-term equity for infrastructure projects," he added.
ETF is an investment fund traded on stock exchanges.
Mayaram pitched for a "bouquet of rated" infrastructure projects to ensure timely funding through the Infrastructure Development Funds (IDFs).
The infrastructure projects, he said, "should be rated in a manner so that it becomes easier for the IDFs to pick them up quickly" to prevent delays.
India would be needing close to USD 1 trillion for development of infrastructure sector in the 12th Five Year Plan (2012-17).