In “Theory of proper management” (March 27), Devangshu Datta has commented on the small number of participants in the Indian share market. He says only 1.5 per cent of Indian households invest in the market and there are only 15 million demat account holders. This isn’t surprising since investing in shares and mutual funds is limited to business people, who are used to both gains and losses. Losses are usually unacceptable to the salaried class.
In the early days of independent India, before liberalisation in 1991, some people bought or inherited shares, but the trading system at that time was so primitive that most people did not know how to encash those shares. So they had to trust intermediaries who often stole most of the proceeds and got away with it, thanks to our slow and tedious legal system. The plantation scams, the holiday home share scams and the Harshad Mehta and Ketan Parekh episodes only made the situation worse by causing a large number of investors huge losses.
It is only now, with massive use of technology, that there is some measure of transparency in share market transactions. The surplus in the hands of many young people, particularly double-income households, is also increasing at a fast rate. Nevertheless, the horror stories of the past are deterring these people. The share market can pick up only if the potential investor can be correctly informed about the entirely different opportunities and risks of investing in shares and mutual funds.
Alok Sarkar, Kolkata
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