Explain the recent Capital Market reforms in India.
Capital market is a market for medium and long-term funds. This market facilitates the institutional arrangements through which long-term funds, both debt and equity are raised and invested. The capital market consists of development banks, commercial banks and stock exchanges. An ideal capital market is one, where finance is available at a reasonable cost. The process of economic development is facilitated by the existence of a well functioning capital market. There are two types of capital market Primary Market and Secondary Market. Primary market facilitates capital formation in the economy by Channelising public saving into productive investments. And secondary market is also known as the stock market or stock exchange. In this market, securities are not directly issued by the company to investors but it is sold by existing investor to other investors. It provides liquidity and marketability to existing securities.
The history of stock market in India goes back to the end of the eighteenth century when long-term negotiable securities were first issued. In 1850 the Companies Act was introduced for the first time bringing with it the feature of limited liability and generating investor interest in corporate securities. The first stock-exchange in India was set-up in 1875 as The Native Share and Stock Brokers Association in Bombay. Today it is known as the Bombay Stock Exchange (BSE). This was followed by the development of exchanges in Ahmedabad (1894), Calcutta (1908) and Madras (1937). It is interesting to note that stock exchanges were first set up in major centers of trade and commerce.
Until the early 1990s, the Indian secondary market comprised regional stock exchanges with BSE heading the list. After the reforms of 1991, the Indian Secondary market acquired a three tier form. This consists of:
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Regional Stock Exchange: There are 21 Regional Stock Exchange (RSE). The first Regional Stock Exchange was Ahmedabad Stock Exchange (ASE) that came into existence in 1894. Next the Calcutta Stock Exchange (CSE) came into existence in 1908. In early sixties, there were only few recognised RSEs that are Calcutta, Madras, Ahmedabad, Delhi, Hyderabad and Indore. The latest stock exchange is Coimbatore Stock Exchange and Meerut Stock Exchange.
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National Stock Exchange: The National Stock Exchange is the latest, most modern and technology driven exchange. It was incorporated in 1992 and was recognised as a stock exchange in April 1993. It started operations in 1994, with trading on the wholesale debt market segment. The NSE was set up by leading financial institutions, banks, insurance companies and other financial intermediaries.
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Over the Counter Exchange of India (OTCEI): Over The Counter Exchange of India (OTCEI) was incorporated in 1990 under the companies act 1956 and it was recognised as a stock exchange under the Securities Contracts Regulation Act, 1956. It started its operations in the year 1992 and it is modeled along the lines of NASDAQ, which is OTC Exchange in USA. And the objective of OTCEI was to provide easy access to the capital market to the small and medium companies. OTCEI is a fully computerized and single window exchange system.
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Indian Railways has launched a new broad gauge solar power train which is going to be a path breaking leap towards making trains greener and more environment friendly. The solar power DEMU (Diesel Electric Multiple Unit) has 6 trailer coaches and is expected to save about 21,000 liters of diesel and ensure a cost saving of Rs 12, 00,000 per year. Name the objectives of management achieved by Indian Railways in the above case.
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The government of India announced Demonetization of ₹ 500 and ₹ 1,000 currency notes with effect from the midnight of November 8, 2016. As a result, the existing ₹ 500 and ₹ 1,000 currency notes ceased to be legal tender from that date. New currency notes of the denomination of ₹ 500 and ₹ 2,000 were issued by Reserve Bank of India after the announcement.
This step resulted in a substantial increase in the awareness about and use of Point of Sale machines, e-wallets, digital cash and other modes of cashless transactions. Also, increased transparency in monetary transactions and disclosure led to a rise in government revenue in the form of tax collection.
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‘Bhasin’ limited was engaged in the business of food processing and selling its products under a popular brand. Lately the business was expanding due to good quality and reasonable prices. Also with more people working the market for processed food was increasing. New players were also coming to cash in on the new trend. In order to keep its market share in the short run the company directed its existing workforce to work overtime. But this resulted in many problems. Due to increased pressure of work the efficiency of the workers declined. Sometimes the subordinates had to work for more than one superior resulting in declining efficiency. The divisions that were previously working on one product were also made to work on two or more products. This resulted in a lot of overlapping and wastage. The workers were becoming indisciplined. The spirit of teamwork, which had characterized the company, previously was beginning to wane. Workers were feeling cheated and initiative was declining. The quality of the products was beginning to decline and market share was on the verge of decrease. Actually the company had implemented changes without creating the required infrastructure.
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