IPOs becoming exit vehicles for early investors: CEA

Nageswaran also cautioned against celebrating “wrong milestones” such as rising market capitalisation ratios or surging derivatives volumes, arguing that they do not reflect genuine financial sophistication and may instead risk diverting domestic savings away from productive investment.

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“While we have succeeded in developing a sophisticated and robust capital market, imbibing some of the best practices from the developed world, although they may have abandoned them. But this may also have contributed in part to more of short-run earnings management optics because they are linked to executive compensation and market capitalisation increase, which also boost the value of stock and options, etc,” said Nageswaran. All of this, he added, has played a role in inhibiting long-term financing and channelling ample cash reserves into financial instruments rather than real-world investment.

“So, there is a need for ambition, risk-taking and long-term investing, otherwise India will find itself falling short with respect to strategic resilience, let alone building strategic Indispensability in the world where we want to be one of the largest players in the coming years,” he said.