Go For A Vibrant Bond Market

Innovations can double the supply of corporate bonds in the domestic market to ₹65-70 lakh crore by march 2025

- Ashu Suyash

The pandemic has not only altered the country’s economic trajectory, it has also brought to the fore the need to focus on social infrastructure. For long, nature has been warning us to shift towards sustainable growth models. Government policy and direction are central to achieving this, be it through infrastructure build-outs, fiscal stimulus or retooling of the economy to address health, inequality and climate change challenges.

Two areas stand out, ripe with possibilities for India and India Inc. alike. One is the under-developed, yet expanding, corporate bond market. The second is something that’s been getting serious attention the world over: environmental, social and governance (ESG)-driven investing.

DEEPENING OF THE CORPORATE BOND MARKET

The fulcrum of the government’s India development (and now building-back) strategy is the National Infrastructure Pipeline (NIP), which envisages ₹111 lakh crore investments between fiscals 2020 and 2025. The focus on sustainable growth will add to that tally. Raising this much money, however, is an onerous ask, particularly given the overwhelming fiscal burden today. Therefore, developing the corporate bond market and finding alternative fundraising avenues will be critical. In line with the historical trend, the government expects corporate bonds to contribute only 6-8 per cent of NIP investments, primarily through public sector issuances. That won’t suffice.