Research On The Path And Performance Of India's Capital Market Reform

The capital market is an important part of the financial market.It has the function of direct financing and optimizing the allocation of resources.Giving full play to the role of capital markets in the financial cornerstone of economic development is particularly important for China in the period of reforms.China and India,as representative countries of emerging economies,have similar time to the founding of the People's Republic of China.After the founding of the People's Republic,they have all implemented a planned economic system for a relatively long period of time;however,India's capital has been transformed from the top-down reform of the capital market since 1992.The market is relatively mature,especially in the field of financial derivatives,and has achieved remarkable achievements.The experience of the development and reform of the Indian capital market has provided a good reference for China to build a strong capital market.Since the founding of the country in 1947,the government has intervened in a deep economy,and financial repression is an inevitable product of India's characteristic planned economy.The tightly controlled capital market is inefficient in terms of financing,transactions,and settlement,and cannot effectively serve the real economy.The macroeconomic system of India's macro-economy has brought with it both domestic and international challenges due to lack of economic growth momentum,slow industrial upgrading,and weak foreign investment willingness.There is no need to fundamentally reform to turn the tide,and capital market reform is An important starting point for economic reform.This paper analyzes the background of India's capital market reform and focuses on the specific measures of India's capital market reform in the capital market opening,the construction of multi-level capital markets,and the development of financial derivatives.India's capital market reforms have achieved outstanding results.The first is to establish a perfect regulatory framework for the stock market.The market size,liquidity,transparency,stability and efficiency of the India stock market have been significantly improved.Secondly,India has achieved a preliminary success in the development of private equity bond market and basically formed a multi-level bond of government bonds,corporate bonds and private debt.Thirdly,In the 15 years from the beginning of the introduction of financial derivatives to the formation of a rich derivative system,the India financial derivatives market has developed from the unseen edge market to an important market with a certain international influence;Lastly,the opening of the capital market in India and the significant upgrading of the level of the overseas institutions,and the investment of the overseas institutions.It has become an important participant and builder in India's capital market.Based on the empirical analysis of the reform performance of India capital market,we firstly evaluate the relationship between capital market development and economic openness and economic stability.The results show that capital market liberalization and capital market development have a significant impact on capital market stability.It is confirmed that the more inflow of foreign capital,the lower volatility of capital market,the more stable capital market,the larger the scale of capital market and the more stable capital market.The relationship between capital market development and economic growth was further evaluated.Controlling macroeconomic variables such as FDI,total import and export volume,fiscal surplus,and money supply,the empirical findings indicate that changes in stock issuances and bond issuances can explain changes in the GDP growth rate,indicating that establishing a sound direct financing system is conducive to increasing the economic growth rate.Based on the experience of the reform of the Indian capital market,it is suggested that the Chinese government should do the following tasks in the key period of the capital market development reform:(1)In the process of capital market liberalization,it should be adhered to: the capital market is open,and institutional access should precede and loosen Capital controls;China's capital market opening to the outside world should be consistent and open to the outside world,open equally,and relax access restrictions for the industry;China's capital market can not be shaken in the direction of opening to the outside world;it should give the “Unicorn” companies a favorable institutional environment for the return or listing.(2)In the process of developing the corporate bond market,it should: increase primary market supply and secondary market liquidity;introduce a hybrid issuance system to increase the flexibility of the primary market of private equity bonds;and improve the disclosure quality of issuers.(3)In the process of constructing derivatives market,legislation should be followed: stocks,ETFs and other equity futures and option products should be included in the regulatory scope of the “Securities Law”;overall planning should be carried out to speed up the development of the financial derivatives market and expand the stock options.Pilot scope;attaches great importance to exchange index resources and avoiding pricing right;avoiding the failure of financial derivatives market,the key lies in the realization of cargo base,good technical reserves,and promotion of market promotion.