Chief Economic Advisor V Anantha Nageswaran | Photo Credit:
“This undermines the spirit of public markets….India’s capital markets must evolve, not just in scale, but in purpose,” said the CEA at CII’s Financing Summit.
Nageswaran underscored that India cannot rely predominantly on bank credit for long-horizon financing. A deep and reliable bond market is a strategic necessity, particularly for financing long-term national objectives.
The CEA noted that insurance and pension funds, whose horizons naturally align with long-term investments, must play a larger role in financing.
However, the edifice of the bond market will be built on the foundations of trust and transparency to which corporate leadership must commit on a durable and demonstrable basis.
Nageswaran observed that financialisation, which means the interest of finance running ahead of the real economy, may mean short-term gains, but undermines long-term economic competitiveness and vitality.
‘A familiar paradox’
The CEA cautioned that globalisation, already fraying at the edges, is being reshaped by geopolitical realignments, trade fragmentation, the race for technological dominance and financial retrenchment.
“Capital flows, traditionally driven by market signals and macro fundamentals, are now increasingly influenced by political alignments and strategic considerations. For India, this presents a familiar paradox.
“On the one hand, we remain among the world’s fastest-growing major economies, with robust macroeconomic fundamentals; on the other, foreign investors continue to demand a higher country risk premium from India compared to several of our developing peers,” he said.
The CEA said the country must guard against celebrating the wrong milestones, such as market capitalisation ratios, or the volumes of derivatives traded.
He emphasised that these are not measures of financial sophistication. They only risk divert domestic savings away from productive investment.
Published on November 17, 2025
