Economic Development of India Essay

The capital mart is the grocery store for securities, whereCompanies and governments can filch long- bourne funds. It is a merchandise in which money is lent for periods long-lived than a year. A soils capital market includes much(prenominal) financial institutions as banks, insurance companies, and stockpile exchanges that channel long-term enthronization funds to commercial and industrial borrowers. Unlike the money market, on which lending is ordinarily short term, the capital market typically finances icy investments like those in buildings and machinery.Nature and ConstituentsThe capital market consists of number of individuals and institutions (including the government) that provide the supply and quest for longterm capital and claims on capital. The stock exchange, commercial banks, co-operative banks, pitch banks, development banks, insurance companies, investment trust or companies, etc., are primal constituents of the capital markets.The capital market, like t he money market, has three important Components, namely the suppliers of loanable funds, the borrowers and the Intermediaries who deal with the leaders on the one hand and the Borrowers on the other. The demand for capital comes mostly from agriculture, industry, trade The government. The predominant form of industrial presidential term developed Capital Market becomes a necessary infrastructure for loyal industrialization,and hence its important for the economy because india is a land if agriculture where more(prenominal) than 70 % of population depends upon agriculture and as India is also an developing nation so,industrialization is moldiness necessaryIn this topic we have discussed that the development of stock market must contributes to economic growth both directly and indirectly. hence stock market plays an important role in the economy of a country. Following the direct channel, we show that market liquidity has a demonstrable impact on growth and indirectly market siz e affects investments which must affect growth of the country. Security markets also play a of import role in economic growth and financial stability. The primary offer of security markets is to serve as a mechanism for the transformation of nest egg into financing for the real sector, and hence constituting an alternative to bank financing.Recent local anaesthetic and global studies show that there is a positive correlation surrounded by the developments of stock markets and economic growth. Stock markets must be precise businesslike in the allocation of capital to its highest-value users. These markets also second to increase nest egg and investment, which are essential for economic development. If an equity market is informationally inefficient past investors face difficulties in choosing the optimal investment, because information on corporate procedure is slow.Role of Securities Markets in Economic DevelopmentThe increasing stringency of cost on both domestic and in ternational loans, the urgency of mobilizing domestic resources by means other than dent finance has been greatly identified. The alternative to debt finance, of course is equity market. Capital market refers to the market for long and medium term funds for the business enterprise. It can be divided into securities and non-securities market. Securities market in turn may be divided unto the markets for primary issues and markets for secondary occupation of the issued securities. In the secondary market, the existing securities change from the investor to another.There is no additional flow of funds for investment purposes in a secondary market it only provides liquidity and marketability to the existing securities. A secondary market is very essential for a new issue market to develop. The secondary market can play most crucial functions in the pace of economic development by the promotion of nest egg and investment and efficient allocation of finds among the users. The securiti es market offers both investors and issues a broad spectrum of investment alternatives, which can help increase the level of both savings and investment. An efficient capital market can play the crucial role in mobilizing domestic savings for the purpose of investment