India's Financial Sector: An Era of Reforms, Vyuptakesh Sharan.
Economic reforms can be classified broadly into two categories: structural adjustments and macroeconomic reforms. The macroeconomic reforms involve an immediate change in policies and aims at achieving short term objectives. A structural adjustment on the other hand, involves more fundamental changes in the way economy will operate. It modifies the very structure of the economy towards meeting long term objectives. Macroeconomic policy reforms encompass production, saving and investment, sectoral development, monetary and budgetary targets and the external sector. Structural adjustment programmes are wide ranging from reducing the role of government in the matter of private sector, to allow prices and income to respond freely to market forces and to open economy to foreign trade and investment. India initiated this process on a full fledged scale as back as early mid-1991. The measures of economic reforms in India are broad based covering all the vital sectors of the economy and consequently, the policies-fiscal, financial, monetary, industrial and external-underwent a big change. The present book "India's Financial Sector: An Era of Reform" by Vyuptakesh Sharan presents a brief account of major economic reforms in the financial sector in India from early years of reforms (1991-92) to the present time (2007-08).
The book starts with explaining the critical link between developed financial sector and economic growth of a nation. Sharan reviews the wide literature available on the topic from various countries across the globe in general and India in particular. He first gives an overview of Indian financial sector and then he explains the nature of reforms in the Indian financial sector. The discussion in this book is divided into three parts.
The first part deal with financial intermediaries which include Indian banking sector, non-banking finance companies, and mutual funds. Author has presented pre reform state of affairs in above three sectors, followed by the measure of reforms initiated by the Government in the early 1990s and then finally the impact of these reforms is anlysed keeping in view the economic growth along with operating efficiency, financial stability and financial inclusion.
The second part facilitates discussion on financial markets and instruments. Here author presents the pre reform state of affairs of primary markets, secondary markets, money market and foreign exchange market in India. Impact of reforms measures has been analysed keeping in view the size of recourse mobilization, composition of the debt and equity in market and participation of private and public sector companies. Secondary market reforms focus mainly on establishment of SEBI as a statuary body, establishment of national level stock exchanges and improvements in listing, trading, clearing and settlement system. Second part also facilitate detail discussion on market for government securities, money market instruments including call money market, repo market, commercial paper market, market for certificates of deposits. Finally there is the discussion of the foreign exchange market as an integral part of financial market.
The third part focuses on the linkages of Indian financial market with international financial market. Linkages are explained in terms of capital flows from international market to Indian market in the form of Foreign Direct Investment (FDI) and foreign institutional Investment (FII) and Indian companies raising funds from international financial market through the issue of foreign currency convertible bonds (FCCBs) and the issue of the shares under ADR/GDR arrangement.
In the end entire discussion is summarised in view of the impact of global financial crisis, 2008, the concluding remarks are followed by a postscript that focuses on the recent trends.
This book serves as a ready reference for the researchers in the area of financial reforms. It covers financial reforms and impact of reform measures in almost all the areas including banking sector, non banking finance companies, financial intermediaries, primary and secondary capital markets, foreign exchange market and finally activities and impact of FDI and FPI in India.
Dr. Himanshu Joshi
FORE School of Management
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|Article Type:||Book review|
|Date:||Oct 1, 2009|
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