Page 28 - DCOM304_INDIAN_FINANCIAL_SYSTEM

Unit 2: Financial Market Reforms

Notes
(` crore)
Period Amount Period Amount
1951-1960 28.50 1991-92 to 1996-97 9737.2
1961-1970 72.80 1997-98 to 2002-03 6226.09
1971-1980 99.20 2003-2008 38035.98
1981-82 to 1990-91 2335.70 2008-2009 326.00

2.3.3 Ownership Pattern of New Issues

Table 2.5 reveals the chequered trend in relative share of public and private sectors in new
security offerings. However, the role of public sector in garnering public funds gained prominence
especially after 1994-95 when public sector undertakings and financial institutions entered the
primary market with issues of bonds. In recent few years, private sector dominated the new
market because of bullish state of the economy and secondary market and investors' growing
interest in equity issues of private enterprises.

It is interesting to observe that in both public and private sectors, banks and financial institutions
mobilized larger proportion of resources by public issues. For instance, they garnered almost 39
percent of resources through public issues in 2007-08. The corresponding proportion was 52.0
percent in 2004-05.

Table 2.5: Exhibits Information about the Ownership Pattern of New Security Issues

(Percentage)
Period Public Sector Private Sector Period Public Sector Private Sector
1990-91 56.8 43.2 2000-01 23.1 76.9
1991-92 50.0 50.0 2001-02 20.0 80.0
1992-93 7.8 92.2 2002-03 64.7 35.3
1993-94 34.4 65.6 2003-04 46.8 53.2
1994-95 14.2 85.8 2004-05 38.8 61.2
1995-96 30.3 69.7 2005-06 21.5 78.5
1996-97 44.5 55.5 2006-07 5.2 94.8
1997-98 48.7 51.3 2007-08 41.7 58.3
1998-99 45.0 55.0 2008-09 0 100.0
1999-2000 62.8 37.2

2.4 Sectoral Pattern of New Issues

Preponderance of infrastructure sector in new issue market has been characteristic feature
during the post-liberalization era. Thus, it may be seen from Table 2.6 that over 40 percent of
the capital was raised in the infrastructure, resonating well with current national priorities.
Financial services was another significant participant in the new issue market. The IT industry-
driver of export revenues raised only 10.7 percent which is a reflection of the fact that the
industry is now in the stable growth phase and internal generation is adequate to meet the
capital requirements.

Another revealing point that can be noted from the table is the niggardly low share of the
pharma and biotech sector. Given the strategic importance of bio-sector in future development
of the country, it would be pertinent to make perspicacious analysis of the factors contributing
to low share of this segment.

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