Q.State with reasons whether you agree or disagree with the following statement.
The capital market plays an important role in India.
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Start your 14-day free trial to unlock the full solution →Agree — the Indian capital market mobilises long-term savings, promotes capital formation, provides finance to industry, government and infrastructure, offers investors liquidity and a wide choice, and thereby accelerates economic development.
Role of the capital market in India
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Mobilisation of savings — it collects scattered small and large savings of households and institutions and makes them available for investment.
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Capital formation — by directing savings into productive investment (shares, debentures, bonds), it raises the rate of capital formation in the economy.
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Finance for industry and business — companies raise long-term funds for expansion and modernisation through the primary market (new issues) and can trade them in the secondary market (stock exchanges).
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Finance for the government and infrastructure — the government raises long-term funds through bonds and securities for development projects, roads, power and other infrastructure.
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Provides liquidity — stock exchanges let investors buy and sell securities easily, so investment in long-term assets remains liquid.
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