Millennium Post

Indian markets can help raise $150 bn a year says BSE chief

This would mark an over 10-fold jump from an estimated $10-12 billion of funds raised annually from the Indian markets over the last 2-3 years from equity IPOs, bonds and Offer For Sale of shares among others routes, he said.

“But, India requires to raise probably USD 150 billion a year from the markets so that it can garner USD 700-800 billion over the next 5-6 years to meet the investment target of USD 2-3 trillion over this period of time to meet the targets under ‘Make In India’ and other initiatives for various sectors,” Chauhan said. The comments assume significance as the equity IPO market has not been good for the last few years, except for the SME platforms, in terms of raising funds.

However, other primary market segments such as corporate debts, have seen a reasonably good collection of funds through public offers, while Offer For Sale (OFS) route has also been very successful in equity market, he said. When asked whether Indian markets are capable of such huge amounts of money being raised, he replied in affirmative and said what needs to be done is focussing on moving people away from non-productive assets like gold, silver and real estate and shift the savings towards financial instruments.

These instruments can be bank deposits, mutual funds or directly into the stock markets, he said. “In some sense, Indian markets are among the most sophisticated markets and also among the most spread-out markets in the world. For example, today BSE is available in 200 cities and towns, or even more where its members are doing investment activity on behalf of their customers.

“Also, everything is automated in our markets. So, if we have to scale up the fund raising capabilities from $10-12 billion a year to $150 billion, it is doable,” he said. The 140-years-old BSE is the world’s largest exchange in terms of number of listed companies, while it figures among top ten bourses globally on various other parameters as well. “If you see the numbers, India is now a $2 trillion economy and it saves 30 per cent. So, India is effectively saving $600 billion a year and over the next 7 years, it would save close to $4.2 trillion at current level even if the economy does not grow at all. “But, if it grows, which is very much likely, the savings would be $5 trillion. So, out of that $5 trillion savings, getting $750 billion is not difficult.

“Today also, around 10 per cent of savings go into financial instruments, so on a $5 trillion base we would be able to bring in at least $500 billion and the remaining $250 billion can come from the foreign investors.

“Over the last 20 years, foreign investors have invested $220-250 billion and if India grows at its pace and gains further momentum, that kind of funding can come easily going further,” he said.

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