Q.Explain the role of the capital market in the economic development of a country.

A country's ability to industrialise depends heavily on whether it has a market that can supply industry with long-term capital.

The capital market contributes to a country's economic development in several ways:

1. Channels savings into productive investment. It converts the otherwise scattered, often idle savings of households and institutions into funds actively invested in industry, infrastructure and government projects.
2. Funds industrial expansion and modernisation. Companies rely on the capital market for the long-term funds needed to set up new units, expand capacity, and adopt newer technology, directly driving industrial output and employment.
3. Supports government development spending. Governments raise long-term funds through government securities to finance infrastructure and development expenditure without relying entirely on taxation or foreign borrowing.
4. Builds a domestic capital base. A deep, active capital market reduces a developing economy's dependence on foreign capital, since domestic savings themselves can meet a larger share of industry's funding needs. …

Describing the capital market's role only in terms of "helping companies raise money," without connecting that fund-raising to its broader economic effects — ind …