The capital market: Then and now

The financial sector has been transformed, but the financing outcomes are not as different as they need to be

The abolition of industrial licensing and a shift in trade and exchange rate policy 30 years ago was a radical change in the relationship between the Union government and the private sector. This about-turn required changes in other policies and institutions, of which the deepest is in the operations of the capital market and the financial sector.

The foundation of the change in the financial system is the large shift in investment funding from the budget to the capital market, with the sharp increase in the share of the private corporate sector in gross fixed capital formation (GFCF), from an average