Question

2) STUDY THE PARAGRAPH AND ANSWER THE FOLLOWING QUESTION

Indian capital markets have a history of more than a century. However, they remained largely inactive till the 1970s. Partial liberalisation of the economy and pro-capital market policies during the 1980s infused some life into the markets, but it was only the economic liberalisation of the 1990s that provided a lasting impetus. Today, segments of India’s capital markets are comparable with counterparts in many of the advanced economies in terms of efficiency (price discovery), tradability (low impact cost), resilience (co-movement of rates across product classes and yield curves), and stability. In particular, their ability to withstand several periods of stress, notably the Asian financial crisis in 1997-98, the global financial crisis in 2007-09 and the “taper tantrum” episode in 2013, is a sign of their increasing maturity. In terms of size, all the major segments of the capital market, viz., Central Government securities (G-Sec) market, market for State Development Loans (SDL), corporate bond market and equity market –– the so called “cash markets” –– have experienced consistent growth during the past few decades in terms of primary issuance, market capitalisation (for equity market) and trading volumes in the secondary market. Equity market remains the largest segment, even as G-Sec, SDL and corporate bond markets have grown steadily.
1) Explain in your words on the dependence & reliability on Indian money market.
2) Explain when did Indian money market played an active role in the economy.​

Answer 1

Answer:

Indian capital markets have a history of more than a century. However, they remained largely inactive till the 1970s. Partial liberalisation of the economy and pro-capital market policies during the 1980s infused some life into the markets, but it was only the economic liberalisation of the 1990s that provided a lasting impetus. Today, segments of India’s capital markets are comparable with counterparts in many of the advanced economies in terms of efficiency (price discovery), tradability (low impact cost), resilience (co-movement of rates across product classes and yield curves), and stability. In particular, their ability to withstand several periods of stress, notably the Asian financial crisis in 1997-98, the global financial crisis in 2007-09 and the “taper tantrum” episode in 2013, is a sign of their increasing maturity. In terms of size, all the major segments of the capital market, viz., Central Government securities (G-Sec) market, market for State Development Loans (SDL), corporate bond market and equity market –– the so called “cash markets” –– have experienced consistent growth during the past few decades in terms of primary issuance, market capitalisation (for equity market) and trading volumes in the secondary market. Equity market remains the largest segment, even as G-Sec, SDL and corporate bond markets have grown steadily.