The integral world of finance

Our goal should be to achieve a low cost of capital for Indian firms, which calls for liquid and efficient markets accessible to all investors

Many firms require capital in tiding over the pandemic. In recent months, large amounts of portfolio capital have come into the country, helping to fill this need. This includes an increase in the use of participatory notes (PNs). Old debates about FDI (foreign direct investment), FII (foreign institutional investor) flows and PNs have resurfaced.

In the India of old, it was argued that FDI was welcome because it helped build factories and provide jobs, but portfolio investment was fickle, chasing short-term returns. In that India, it was argued that policymakers would determine the nature of investors, investees, and financial instruments that