Finance Minister P Chidambaram has exuded optimism in the Indian capital markets, saying that their bouyancy testifies to the confidence that has been reposed in them by the investing community.

“With a market capitalisation of 101 per cent of GDP at the end of December 2006, India compares favourably not only with emerging market economies but also with Japan (112 per cent) and South Korea (93 per cent),” Mr Chidamram said in his address on Wednesday to the Norweigian Schoool of Management.

Retail participation

The theme of the Finance Minister’s address was, ‘India’s emergence as an economic power: Road travelled and the way forward.’ The Finance Minister said an important feature of the stock markets is the large retail participation. In 2006-07, $8.43 billion was raised in the Indian market through equity and rights issues. In the current fiscal, companies have already raised $7.16 billion.

Assets under management of mutual funds are presently valued at $120 billion. “The buoyancy of investment, including foreign investment flows testifies to the confidence reposed in India’s capital markets,” he said.

Mr Chidambaram said India provides to foreign investors an opportunity that is almost unrivalled. “No other country in the world, save perhaps China, needs and can absorb such large amounts of foreign investment in its infrastructure sector,” he said.

Mr Chidambaram said the Government has created business environment that encourages and facilitates entrepreneurship.

Speaking about the challenges that face the country, Mr Chidambaram, noted that India ranked low, at number 126, among the countries of the world according to the Human Development Report, 2006.