Comparative Analysis of Corporate and Government Debt Markets in India

Introduction: By the time of Independence, Industrial Sector Development was nominal, and in fact Corporate Debt and Market for Corporate Debt concepts were a distant dream and a nightmare also. All we had in Debt Segment was short term Debt only, which is disbursed by Commercial Banks, that to with Private Ownership. After independence, due to control over the private sector, subsequently nationalization of banks, debt market went to the hands of Govt. securities, and commercial banks became the key players of Indian debt market. Even after the establishment of SEBI Corporates were under the Govt. regulatory regime and were not allowed to issue bonds, exceeding their Debt-Equity Ratio. On the other hand common investors were not interested in Debt Market instruments due to the absence of Secondary Market for Debentures and high stamp duty on Bonds. This situation continued till 1991.Another blow for Debt Market was economic liberalization. With liberalization, imports got increased and fresh domestic investments got reduced. The competition from outside made homogenous corporates to go for mergers and amalgamations which further reduced the demand for funds in the market. Objectives: objectives of the study are : 1. To study the trend pattern of the corporate and Govt. debt in India, 2. Sector and size wise break up of number of debt market issuances by both corporate and Govt. 3. Private sector Vs non-private sector issuances. Methodology: Literature is reviewed from secondary sources of data like different websites, journals and books. Secondary data is thoroughly reviewed and analyzed with the help of tables and graphs. Results: It is found that in this study, though initially Govt. securities market occupied considerable share in the debt market, but gradually due to change in govt. policies, change in outlook of the corporate towards debt equity ratio, and change in the perceptions of investors towards purchase of debt instruments, the market share of coporate securities market in total debt market is getting increased.