Impact of Capital Market on Indian Economy Essay

yearn enclosure finance for corporate and government The roof trade is the commercialize for securities, where companies and governments can raise long term finances. Selling stock and merchandising bonds be two ways to generate capital of the United States and long term funds. It provides a new avenue to corporate and government to raise funds for long term. Helps to bridge investment savings interruption detonating device commercialise expand the investment options available in the country, which attracts portfolio investments from abroad. Domestic savings are also facilitated by the availability of additional investment options. This enables to bridge the gap between investment and savings and paves the way for economic development. Cost good mode of rise finance Capital market in both country provides the corporate and government to raise long term finance at a low cost as compared to other modes of raising finance Therefore capital market is important, more so fo r India as it embarks on the path of becoming a developed country.Provides an avenue for investors to commonality their surplus funds Capital market provides the investors both domestic as well as irrelevant, various instruments to invest their surplus funds. Not and it provides an avenue to park surplus funds but it also helps the investors to draw off decent rewards on their investment. This realization has resulted in increased investments in capital market both from domestic as well as foreign investors in Indian capital market.Conducive to implementation of Monetary polity since RBI controls the movement and availability of money in the economy. When RBI follows the expansionary constitution it purchases government securities from the bond market and sells the same in the in the substitute(prenominal) market. This process has some effect on the interest rates. Thus capital market helps RBI in applying the monetary policy. Indicates the state of the economy Capital market is said to be the face of the economy. This is so because when capital market is stable, investments flow into capital market from within as well as outside the country, which indicates that the future prospects of the economy are good.