FSDC decides to take steps to make Corporate Bond Market more vibrant; Confident about India’s medium to long-term economic growth prospects

27 july The Financial Stability and Development Council (FSDC) in his meeting on 27th July 2011, has decided to take steps to make Corporate Bond Market more vibrant. Reviewing the action taken on the decisions taken in the first two meetings of the Sub Committee of FSDC, the Council noted that the Corporate Bond Market should be developed to enable the industry to raise funds for debt funds for infrastructure.

The Council also underscored the need to immediately establish the Infrastructure Debt Funds with a view to enabling the private sector raise half of the trillion-dollar outlay envisaged in the 12th Five Year Plan.

On the state of the Indian economy, the general consensus was that while inflation may not be conducive to short-term economic growth, India’s medium to long-term economic growth prospects remain bright. In the short-term, it is necessary to tackle inflation. It was noted by the Council that investment as a percentage of GDP is encouraging and this should help growth prospects of the nation. The Provisional Tax collections figures for the first quarter of current fiscal are encouraging and they give reason for optimism on growth and meeting the fiscal targets.

On the issue of Sovereign Credit Rating of India, it was decided that it would be necessary for the government to strengthen its interaction with the rating agencies. The Council noted the recent structure that has been put in place in the Ministry of Finance for the exchange of information with the credit rating agencies. For better interaction with the agencies, it was decided to further broad base the process and present India’s case for higher rating by studying the methodologies adopted by the rating agencies.

With regard to the issue on Monitoring Financial Stability, it was decided that the regulators would share their assessments in the Sub-committee of the FSDC and with the Secretariat of FSDC and discuss the same in the Council. This process will be an input in their reports on assessment of financial stability.


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