India's Capital Market Growth

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I n d i a ' s C a p i t a l M a r k e t G r o w t hIrends, Explanationsand Evidence

R NagarajThisstudy,first, documentsIndia'scapital marketboom, and itsproximatecauses. Whatdoes itmeanfor the economy

and private corporate sector? It is largely disintermediation:household sector substituted 'shares and debentures'for bank deposits, and corporate sector securitised its debt. There is no association between growth rates of thecapital marketmobilisation and aggregate saving rate, corporatephysical investmentand value added. Long-termdecline in the contributionof internalfinance to corporatefixed investmentand in profitability in 1980s are noted,despite a fall in ratio of corporate tax to gross profit. The study concludes by raising some questions.FOR some time now, the capital market inIndiais muchin news.' Thereis a widespreadappreciationof the privatecorporatesector's(corporatesector, hereafter)ability to issueagrowing volume and varietyof marketablesecurities,as this suggests an increasingrolefor markets in the economy's resourceallocation. It also raises many questions.Whatdoes the trendimply for the economy'saggregate saving rate and its composition,andforcorporateperformance.Is it necessaryand desirablefor the economy's long-termdevelopmentprospects?This study seeks toexplore these and related questions.Section I describes long-term trends inIndia'scapitalmarketgrowth.To understandthem, Section II briefly reviews the recentliterature.On this basis, Section IIIexaminesthe implications of the observed trendsforthe economy and the corporate sector.Summarising the main findings, theconcluding section raises some questionsthat seem to follow from thecapitalmarketdevelopment.

TrendsAfterremainingdormantfor nearlytwodecades since around 1960, resourcemobilisation in the primary capital marketshowed an upturn from the late 1970s(Figure 1). The growthacceleratedtowardsthe end of 1980s. The marketcapitalisationratio wentup from about5 percent of GDPin 1980-81 to 63 per cent in 1992-93.2 In

eight years after 1986, the average dailyturnover in the secondary market grewat about 35 per cent per year.: Between1980-81 and 1992-93, the RBI index ofsecuritiespricesincreasedalmostthrice(20.7per cent per year) as fast as the wholesaleprice index (7.6 percent per year). This, inprinciple,reducescost of equity capitalandincreases prospects for capital gains.However, much of the growthis for debtsecurities. About a third is for convertibledebentures.4Proportionof equity (or risk)capital in market mobilisation came downfrom about 90 per cent in the early 1970s

to about 30 per cent two decades later(Figure2). However, in absolute terms,nominal value of freshequity capital raisedgrew at 18 per cent per year. Promoters'contributioninthis morethandoubled,from21 per cent in 1970-71 to 45 per cent in1990-91. This, in principle, is a favourablechange as they now have a greaterstakeinthecompanies' financial success (Table1).5Proportionof equityunderwrittenalso rosesteadily, reflecting the stock market'sgrowing maturity [Samuel 1996a].Moreover, the marketwitnessed growthofnew financial institutionsoffering a varietyof services and tradableinstrumentswithvarying components of debt, equity,maturities and risk.6How does India compare with other'emerging market economies '(EME)?Reportedly,Indiais the biggest among themwithabout8,000 quotedcompaniesin 1995,an increase of over 70 percent over the lastdecade (The Economist,July 6, 1996).7 Inmarketcapitalisation,India rankedseventhin 1995 (The Economist, July 15, 1995).XHowever,as Indianfirmsaresmall(measuredby marketcapitalisation),theydo notfigurein the list of top 30 firms in EMEs (TheEconomist, August 12, 1995).Whatexplainsthecapitalmarketgrowth?Proximate causes are a series of policyinitiativessince aroundthe late 1970swhen,asmentioned,the stockmarkethada marginalrole infinancingindustry.9Initially,dilutionofequityholdinginforeign-controlledrupeecompanies - popularly called the 'FERAcompanies', as they attractedthis 1973 act- wasperhapsa conscious effortto stimulatethe primarycapitalmarket[Morris1985].10FERA companies' success was probablysignificant for furtherdevelopment of themarket.This broadly coincided with the rise innominal interest rates and the financialsector'sgrowingresourceconstraint.Ii Withincreasingreserverequirementand'prioritysector'lendingtargetsatconcessionalinterestrates, commercial banks reportedlycouldnotmeet the industrialsector's creditneeds.Inthesecircumstances,developmentfinance

institutions (DFI) persuadedfirms to raisepartof the requiredfunds from the capitalmarket.'2Anticipating corporate sector'sresourceconstraintin theSixthPlan(1981-85),govemmentinitiatedmanystepstoencourageflow of householdsaving intocapitalmarket[Planning Commission 1982].'3 Theseincluded hike in interest rates on debtinstruments,theirconvertibilityintoequity,raising of tax exemption limits on dividendincomeandeasingits (andinterest)deductionat source.Similarly,corporatetax rateswerereduced.'4Thuscapitalmarketreformssince1991 perhaps reflect a continuation of atrendinitiated over a decade ago.'5What do these trends (and policies thatseem tounderpinthem)implyforlong-termdevelopment?Do they representa 'natural'evolution of a 'repressed'financial systemtowards a more 'market-oriented'systemwith a greater need for regulation, as theNarasimhamCommitteenoted[Governmentof India 1991]. Does it necessarily mean agreaterallocativeefficiency as resourceuseis increasinglymarketdetermined?Aretherealternative'models'or'systems' of financialdevelopmentto choose as ourtrajectory.Toexplorethesequestions,the recentanalyticalliterature and comparative experience isbriefly reviewed below.

IIAn Analytical SketchFor much of the recent literature onfinancial markets, Mackinnon (1973) and

Shaw (1973) form the points of departure.These studies argue that state interventionin setting interest rates and quantitativemeasuresof resourcesallocation- definedas financialrepression- adverselyaffectnotonly allocative efficiency but also depresstheaggregatesavingrate(henceinvestment)in less developed economies (LDCs).Therefore, they advocate liberalisation offinancialmarkets.However,theirargumentsaremostlyrelatedto interventionsinbanking,like interestratesceiling, statutoryreserverequirements and directed lendingprogrammesat concessional interest rates.

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FIGURE 3: GROSS DOMESTIC SAVING AS PER CENT OF GDPMP, FIGURE4: SHARE OF FINANCIALSAVING IN GROSS DOMESTICSAVING,1950-51 TO 1993-94 1960-61 TO1991-9224 _ 60 _22 552018 5016 - 45 -

40-U12-3535

8 -30-6

25-

2 201550-51/55 60-61/65 70-7 1/75 80-81/85 91-92/94 61 67 73 79 85 9155-56/60 65-66/70 75-76/80 85-86/9 1 64 70 76 82 88

Average for the year Fiscal year endingCIGDS as percent GDPmp 0 Per cent financial savingsSource: National Accounts,Statistics,various issues. Source: National Accounts, Statistics, various issues.

market...stockmarketscontributeverylittleto new sources of finance for companies:new equityissuesaccountfor well under10percentof thetotalsourcesof financeraisedby companiesinall majorOECDcountries...bondmarketsarea relativelyminorsourceof finance for industryin aggregatein allcountriesother than the US and Canada.[Mayer 1992: 465120Reiteratingthe same stylisedfact, Stiglitzhighlights problemsof informationfailurethataresevereinfinancialmarketsandnotestheneed forstateintervention[Stiglitz1991,

1993]. He says, "... we must bear in mindthe quite limited role that they [marketforequity] play in raisingcapital in developedcountries. Hopes of raising substantialamountsof capitalin this formwithinLDCsappear to me to be unreasonable." In afootnote,he furtheradds,"Today,investorsin LDCs bring to bear the full experienceof how equities have been abused, evenin societies with fairly well functioninglegal systems. This should make themwary about what would happenin LDCs"[Stiglitz 199 1:11].Thus, we seem to have two broadlycompeting perspectives. One, the financialliberalisationthesisthatemphasisescentralityof stock marketin resource allocation andthesecondarymarket'sdiscipliningrole(withindependent supervision) on managerialbehaviour. Two, information economicstheorists who, on theoryand history,arguefor its limited role.Indevelopmenteconomics, stockmarketdid not receive adequateattention as it is arecent phenomenon in LDCs. To ourknowledge, Singh and Hamid (1992) andSingh (1995), analysingcorporatefinancing

pattern of top 50 (100) private corporatefirms in nine (ten) EMEs in 1980s, aresignificantefforts.2'Contraryto the OECDexperience they find, on average, equitycapitalfinancesabout40percentofcorporateinvestment growth in these economies.22However, noting the limitationsof sample'size and methodology, Cobham andSubramaniam (1995) seriously qualifySingh's finding. Followin& Mayer'smethodology,they showa much-limitedrolefor equity in financing corporategrowthinIndia. To quote them:...India is broadly comparable to... Franceand Italywhich have relativelysmall stockmarket (with no market for corporatecontrol),largesectorsof mediumandsmall

sized companies and abanking system whichlends substantial amounts to companies butdoes not have very close ties with firms andcannot exert the same influence and controlover them typicalof Japanesebanks [Cobhamand Subramaniam 1995: 31].Mindful of the OECD experience andanalytical limitations of the financialliberalisationthesis, Singh(1992) suggestedthat the real test for capital market indevelopingeconomies is its effect on saving,investment and growth.To quote him:...the important question is whether thedevelopment of the stock markets in theseeconomies has led toanincreaseinaggregatesavings or whether it simply represents thesubstitutionof Qneform of saving (say bank

TABLE 3: SHARE OF RETENTIONIN FINANCINGCORPORATEPHYSICAL INVESTMENT,1956-57TO 1991-92Year DattaRoy ChaudhurySeries RBI NAS

Gross Retention' Net Retention2 Series3 Series4(1) (2) (3) (4)

1956-57/59-60 64.4 34.2 34.51960-61/64-65 67.1 54.3 60.1 50.51965-66/69-70 126.5 55.6 61.9 94.81970-71/74-75 95.2 92.5 64.3 119.01975-76/79-80 86.7 75.0 62.4 89.71980-81/84-85 58.5 37.9 49.6 16.31985-86/86-87 39.4 5.0 30.11985-86/89-90 49.5 42.31990-91/91-92 - 50.1Notes: I Gross saving (retainedearningsplusdepreciation)asper centof grossfixed capitalformationat currentprices.2 Net saving (retainedearnings) as per cent of net fixed capital formationat currentprices.3 Gross saving as per centof grosscapitalformation,for mediumandlarge non-financialpubliclimited companies.4 This includes financial companies and co-operative banks and societies. But since non-financialcompaniesform over 90 per cent of the total, these figuresare broadlycomparablewith the rest of the table.Source: DattaRoy Chaudhury(1992); RBIBulletin,various issues.

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FIGURE5: TAXPROVISIONASPERCENTAGEOFCORPORATESECTOR'S FIGURE6: CORPORATEPROFITABILITY:GROSSPROFITAS PERCENTAGEOFGROSSPROFIT,1960-61 TO1990-91 CAPITALEMPLOYED,1955-56 TO1986-8744 2042- 19I40 138 -1836- 17-34-32 1 16 -

r.3003ol~2826 1424 132220 12181614 1061 64 67 70 73 76 79 82 85 88 91 56 59 62 65 68 71 74 77 80 83 86

Fiscal year ending Fiscal year endinga Tax provision o Corporate profitabilitySource:RBIBulletin,various issues. Source: DuttaRoy Chaudhari(1992).

savings or government bonds) for another(purchase of corporate shares in stock-market)...it could be argued that the stockmarket is still useful insofar as it leads toa more efficient allocation of these savingsor to better corporateperformanceas a resultof stockmarketexposure(pp 38-39, emphasisas in the original).The preceding brief review helps us askrelevant questions about the recent Indianexperience.Whatdoescapitalmarketgrowthmean for domestic saving rate, corporateinvestment rate and output growth? Whatproportionofphysical investmentis financedby internalresources?Has it changed sincethecapitalmarketboom?Doescapitalmarketmobilisationrepresentadditionalresourcesfor investmentor a substitutionof externalfinance for internal resources? Has thecompositionof externalfinance changedinrecent years? Is capital market boomassociated with improved corporate per-formance?The following section examinesthese questions empirically.

IIIEvidenceINDIA'SCORPORATESEroR:ABRIEFAccouNTr

In this study, the corporate sector isdefined as non-financial, non-governmentjoint stock companies. As this sectoraccessed bulk of the capital marketresources, it will be useful to begin bydescribing the broad dimensions of thissector. In 1994, it consisted of about 3.4lakh registeredcompanies [DepartmentofCompanyAffairs 1995]. Slightly less thanhalf of them areengaged in manufacturingand abouta quarterin 'finance, insurance,realestateandbusiness services'. However,

bulk of corporatevalue added originates inregisteredmanufacturing.Only about 12 percentof the corporatesectorarepubliclimitedcompanies, yet they account for about 80percent of the total paidup capital. Amongpublic limited companies, the top 670companies accounted for 43 per cent ofnet value added in the corporate sector in1986-87.23Only about 2 percent of publiclimitedcompanies accessed capital marketin 1993-94.Corporatesector constituted II per centof currentGDPfc in 1986-87 (about 9 percent in 1960-61), and about27 percent of

non-agriculture, private sector GDPfc.24Within the corporatesector, public limitedcompanies' share in value addeddeclinedby 10percent (from 80 percent), over twoand a half decades from 1960-61. Thisseem to broadly correspond to fastergrowth in the number of private limitedcompanies. In otherwords, private limitedcompanies, representingmostly small andclosely held firms, increased theirshareincorporate sector value added.25 Thesestatistics show the relative size of India'scorporate sector and the (skewed)distribution of firms in it.TABLE 4: CHANGING COMPOSITIONOF CORPORATESECTOR'S EXTERNAL FINANCE, 1961-62 TO 1990-91

Years As Per Centof Total ExternalFinance As Per Cent of Gross CapitalFormationPaid-Up Borrowing Trade Paid-Up Borrowing TradeCapital Credit Capital Credit1961-62/64-65 17.3 52.6 30.0 10.6 33.2 18.91965-66/69-70 10.9 56.4 32.5 7.5 38.7 22.11970-71/74-75 5.7 40.9 54.5 2.7 23.6 31.91975-76/79-80 4.4 46.6 48.7 4.2 45.0 46.41980-81/84-85 4.0 55.2 40.2 3.6 50.2 36.31985-86/89-90 11.3 55.7 33.5 10.4 57.8 39.31990-91/91-92 11.8 54.5 33.6 11.5 55.1 34.0Note: Paid-up capitalincludessharepremium.Source: RBI Bulleti, various issues.

TAB3LE5: CHANGINGPROFILEOF CORPORATEBORROWING,1961-62TO 1990-91Year Share in TotalBorrowingBanks Debentures Fixed Deposits Others1961-62/64-6.5 63.3 36.71965-66/69-70 62.0 38.01970-71/74-75 72.9 27.11975-76/79-80 55.6 44.41980-81/84-85 30.0 22.0 13.3 34.71985-86/89-90 38.3 28.0 6.8 26.91990-91/91-92 26.6 23.7 2.7 47.0Source: RBI Biulletin,various issues.



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TRENDSINAGGREGATESAVINGANDITSCOMPOSITIONAs is widely known, India's grossdomestic saving rate (GDS) after peakingat 23 per cent of GDP at market prices(GDPmp)in 1978-79, fluctuatedaround21percent for about a decade, till it regainedthe earlierlevel in 1990-91. Figure 3 showsfive-yearly averagein GDS sincel 950-51 .2The share of financial saving in GDS rosesteadilyfrom20 percent in 1970-71to about55 percentin 1984-85. However,it declinedto about 40 per cent in the second half of1980s, though it has improved somewhatsubsequently (Figure 4). Therefore, noassociation exists between capital marketgrowth and aggregate saving rate (or itsshare in financial assets).27However, in the 1980s financial saving'scompositionshiftedaway frombankdepositsto 'sharesanddebentures',withlittlechange inthe shareofresourcesaccruingto governmentthrough contractual saving schemes, likeprovidentfund(Table 2). Between 1980-81and 1992-93, the proportionof 'shares anddebentures' in financial saving increasedfour times, from 5 per cent to 21 per cent.Therefore,the growth of (primary)capitalmarketmobilisationrepresentsa substitutionof tradablesecuritiesfor(fixed interestrate)bankdeposits.Higherthanbankinterestrateondebentures,withopportunitiesforcapitalgains (incase of convertibledebentures)andtax saving (in case of tax-freepublic sectorbonds) areperhapsresponsiblefor the shiftin.the portfolio.28

CHANGINGPAIERNOFCORPORATEFINANCEThis subsection uses three sets of timeseries data:(i) DattaRoy Chaudhury(1992)for 1955-56 to 1986-87, (ii) RBI financesof medium and large non-financial publiclimited companies, 1960-61 to 1991-92 and(iii) flow of funds(FOF)of privatecorporatebusiness sector, for 1951-52 to 1991-92.29We use balance sheet data as welt as FOFtable covering overlappingtime periods toensurerobustnessof ourfindings.Oureffortseems an improvementover Singh (1995)

as well as CobhamandSubramaniam(1995)since we use data for the entire privatecorporatesector,andforthreeto fourdecades.A significant long-termtrendis a declinein share of internal finance in corporatephysicalinvestment.Accordingto the DattaRoyChaudhuryseries,grossinternalfinanceas a proportion of (nominal) gross fixedcapital formationat (GFCF) declined froma high of 126.5 per cent to 39 per centbetween 1966-70 and 1985-87 (Table 3,column 1). In the RBI series (column 3),ratioof gross internalfinance and (nominal)gross capital formation (GCF) also show asimilar trend,though the extent of declineis less. Thetrendis broadlysimilaron a 'net'basis as well.3"In the DattaRoy Chaudhuryseries,ratioof netretention(retainedearning)and (nominal) net fixed capital formationpeaked during 1971-75 and reached a lowof 5 per cent during 1986-87 (column 2).Using National Accounts Statistics (NAS)also, the ratio shows a similartrend,thoughit improvedby early 1990s (column4). FOFdatafor fourdecadessince 1951-52confirmsthese changes.3'This seems significant, asit is at variance with the trends in thedevelopedeconomies. As mentionedearlier,Mayer showed that in all major OECDcountries internalfinance forms a high andstable proportionof capital formation.In India,the shareof internalfinance fell,despite a secular decline in corporatetaxprovision as a proportionof gross profit,from about40 percentinmid-1970sto about15 percent by the end of 1980s (Figure 5).Thisperhapsquestionsthewidelyheldviewthattaxreductionincreasescorporatesector'sinternal resource generation.What happened to the composition ofexternalfinancewithcapitalmarketgrowth?The RBI series show that the share of freshpaid-upcapital(includingpremiums)intotalexternalfinanceincreasedfrom 4.4 percentduringthe second half of 1970s to 11.3 percent a decade later (Table 4). This level ofequityfinancingis comparableto thatduring1960s.32 A similar change in externalfinance's composition is evident as aproportion of corporate gross capitalformation also.

However, the share of borrowing hasremainedstable atover one-half of externalfinance in 1980s. Therefore, increase inequity finance has compensated for thedecline in the shareof tradecredit.However,composition of 'borrowing' has changed:shares of banks and fixed deposits havecome down significantly,with acorrespond-ing increase in the proportionof debentures(Table 5).FOFdatasince 1951-52 arealso consistentwiththeseobservations,suggestingthatmuchof the growth of capital marketrepresentssubstitution of securitised debt for bankcredit, tradecredit and fixed deposits (witha limited increase in equity financing)(Table6).In principle, greaterreliance on externalfinancesubjectsfirmsto theconstantscrutinyof capital market. If increase in share ofexternalfinanceboostscorporateinvestmentrate,it may be desirablesince, as Singh andHamid noted, many rapidly industrialisingeconomies like South Koreadisplay such apattem.AsTable 7shows,inIndia,corporateGFCF as a proportionsof (i) GDPmpand(ii) aggregateGFCFincreasedinthesecondhalf of 1980s.However, is this association statisticallysignificant?Overthreedecadessince1961-62,(nominal) annual growth rates of capitalraisedandcorporateGFCFhaveastatisticallysignificant positive correlation (Table 8).However, the correlationturnsstatisticallyinsignificant for the period since 1980-81,TABLE 7: GROSsFIXED CAPITAL FORMATION,1955-56 TO1993-94

Year CorporateGFCFas Per Cent ofGDPmp TotalGFCF1955-56/59-60 1.6 12.31960-61/64-65 2.5 17.61965-66/69-70 1.4 9.51970-71/74-75 1.6 10.61975-76/79-80 1.6 8.81980-81/84-85 3.4 17.51985-86/89-90 3.5 16.31990-91/93-94 5.7 26.0Note: All values at currentprices.Source:National Accounts Statistics, variousissues.

TABLE 6: FINANCINGOF CORPORATEBUSINESS SECTOR, 1951-52 TO 1991-92Year Deficit Financedby Sectors Deficit Financed by InstrumentsBanking OtherFin Government HH Rest of Others Currency Securities Loans Trade OthersInstitution Sector the World Credit51-52/55-56 15.1 9.6 7.0 66.1 1.9 - -11.5 47.8 57.5 5.8 -56-57/60-61 38.6 8.7 10.1 29.9 6.5 6.2 -3.4 31.2 81.6 -7.5 -1.861-62/65-66 50.9 22.2 7.2 15.8 3.9 - -3.8 28.6 80.8 -5.6 -66-67/70-71 54.9 19.7 6.9 15.3 2.7 0.5 -5.1 19.7 85.6 -2.3 2.471-72/75-76 35.5 14.4 6.8 35.2 3.0 5.1 10.7 9.7 45.4 16.6 17.676-77/80-81 20.6 18.9 5.7 35.5 0.6 18.6 4.7 14.1 43.6 10.6 26.981-82/85-86 29.6 24.1 0.8 24.6 0.7 20.2 -2.8 18.6 47.5 4.0 32.786-87/89-90 37.4 48.7 -0.2 8.7 1.1 4.3 -1.4 30.7 43.5 1.0 26.290-91/91-92 10.7 77.9 -0.7 8.6 7.4 -3.8 -17.4 29.8 54.4 5.2 38.0Souurce: RBI Bulletin, various issues.

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when thecapital marketboomed. The samefinding holds with one year lag also.Therefore,on the face of it, the hypothesisthat capital market resource mobilisationcould havefavourablyinfluenced corporatephysical investment growth does not seemvalid.Arguably,capitalmarketboom mayhavecontributedtooutputgrowthby encouragingbetteruse of existing capitalstock. This doesnot seem to be true either. Growth rateofreal net value added in corporatemanufacturingis lower thanthatof registeredmanufacturingas a whole (Table 9).33 Thisholds for 1973-74 to 1990-91 as well as forits sub-period, 1980-81 to 1990-91, whenmanufacturingoutput growth witnessed anupturn.This means(as noted earlier),smallsized, non-corporatefirmshave contributedmore to the improvementin manufacturinggrowth rate in 1980s than the corporatesector.Is the capitalmarketboom then associatedwith improved corporate profitability?Datta Roy Chaudhury data suggest thatprofitability (gross profit as percentageofcapitalemployed) fell sharplyby 7 per cent,from around 19 per cent during 1981-87(Figure6).This is consistentwithSinghandHamid'sestimatesfortop50 companiesfor1980-88. During the three decades since1960-61, corporate sector's profit margin(profit before tax as percentage of totalincome) has come down by more than half(Table 10). Profit before tax as percentageofnet assets andprofitaftertax aspercentageof networth(representingreturntoinvestor)show agradualdeclinesince themid-I970s.However, these trends may have changedsomewhatin the 1990s, thoughtheevidenceis limited for two years.One could arguethatreal efficiency gainin securitiesmarket is likely to come fromcontestabilityofmanagementsthroughthreatof take-over.This question is as yet largelyhypothetical, since this route to possibleefficiency gainsis legally restrictedin India.To answer the questions that we posed(quoting Singh) in the last section: there islittle association between capital marketresourcemobilisationandaggregate savingrate,andcorporatephysical investment andoutputgrowth rates. As Singh speculated,primary stock market growth seems torepresenthouseholds sector's substitutionof 'sharesanddebentures'for bankdeposits.Firmssecuritised theirdebt,insteadofgettingit from banks, or as tradecredit and fixeddeposits. These developments representfinancialdisintermediationthatmanyOECDcountries witnessed about a decade ago.34No statistically valid relationship existsbetween growth rates of capital marketmobilisation and corporate physicalinvestment (and output) in manufacturing.Significantly,corporateprofitabilitydeclined

in 1980s when capital marketboomed." Inother words,withcapitalmarketgrowth, anincreasing share of loanable funds haveaccruedtoasectorthatcontributedrelativelyless to outputgrowthandthatdid not improveits investment rate either.IVConclusion

In sum, India's capital marketwitnesseda rapid growth since around 1980. Itaccelerated by the end of the decade. Thisis also significant in comparisonwith otheremerging market economies. Increases innominalinterestratessince earlylastdecade,incentives offered on tradedsecurities, andchangesinrelatedpolicies (and procedures)seem responsible for this development.The financial liberalisation thesis positsits likely positive effect on the economy'ssaving, investment and efficiency. A wellfunctioningstock marketalso hasascreeningand monitoring role. However, recentadvances in analytical literaturehighlightsthe possible inefficiencies in financialmarkets due to imperfect information thatcould be acuteinLDCs,andunderscorestheneed for stateintervention.Further,revivingthefinancing hierarchyhypothesis, thenewevidence on corporatefinancialstructureinmajorOECD countriesshows thatthe stockmarkets contributed very little to fixedinvestment. Secondary market's role inimprovingcorporategovernanceisalso opento a serious debate both on theoreticalandempirical grounds. In the light of thesecompetingperspectives,thisstudyexaminedtheimplicationsof theIndia'scapitalmarketboom for the economy and the corporatesector.Capital market growth has changeddomestic financial saving's compositionfrom bank deposits to 'shares anddebentures',withoutfavourablyinfluencingdomesticsaving rate,or its shareinfinancialassets. Equity capital's share in the totalcapitalmarketmobilisationdeclined,asbulkof such mobilisationis in the form of debtsecurities. However, growth rate of freshequitycapitalraisedis substantial.Promoters'contributionto it has more than doubled.This could possibly improve financial

performanceas promoters have a greaterstake in their firms.Over the last two decades, the cerporatesector that securedmost of these 'resourceswitnessed a long-termdecline i.n the shareof internal finance in corpceratephysicalinvestment. In mid-1980s, retained eamingaccounted for less than lCJper cent of grossinternal resources. This happened, despitea steady fall in tax buirden(tax provision asproportionof gross profits).These changesare quite at variance with the developedcountries'experieznce,whereintemalfinanceformsthelargestandstablesourceoffinancefor corporatecapital formation.In 1980s, composition of extemal financeshifted away from trade credit to equitycapital(includingsharepremium),while theproportion,of borrowingremainedhigh andincrease'J somewhat. However, withinborrowing,debenturesreplacedbank creditand fixed deposits.There is no statisticallyvalid associationTABLE9: GROWTHRATESOFREALNET VALUE

ADDEDINREGISTEREDMANUFACTURINGANDCORPORATEMANUFACTURINGSECTORS.(Per centper year)

Years Registered Corporate1973-74 to 1990-91 5.7 4.41980-81 to 1990-91 7.1 6.3Note: Implicit registeredmanufacturingGDPdeflatorsare usedtocomputerealvalues.Source:Annual Survey of Industries:SummaryResultsofFactorySector,variousissues.

TABLE10: CORPORATEPROFITABILITY,1960-61TO 1991-92

Years PBT as PBT as PAT asPerCent Per Cent PerCentof Total of Net of NetIncome Assets Worth1960-61/64-65 9.0 14.0 9.71965-66/69-70 6.9 11.5 8.31970-71/74-75 7.3 15.5 11.51975-76/79-80 5.9 15.0 10.21980-81/84-85 4.7 11.2 11.11985-86/89-90 3.7 6.8 7.71990-91/91-92 5.9 10.0 12.8Note: PBT - Profit before tax; PAT - Profitafter tax.Source:RBIBulletin,various issues.

TABLE8: SIMPLECORRELATIONCOEFFICIENTSBETWEENNOMINALANNUALGROWTHRATESOFCArPITALRAISEDANDGROSSFIXEDCAPITALFORMATIONINCORPORATESECTORYear No of Correlation No of CorrelationObservations Coefficient Observations Coefficient( 1) (2) (3) (4) (5)1961-62/91-92 31 0.361* 30 0.01961-62/79-80 19 0.446* 18 (-)0.424*1980-81/91-92 12 0.246 1 1 0.0Notes: I Columns 4 and 5 refer to a lagged relationship between capital raised in year 't' withnominal GFCF in year (t+1).2 * Statistically significantat 90 percent confidence level.Source:National AccountsStatistics,variousissues.



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betweencapitalmarketresourcemobilisationand growthin corporatefixed investmentorgrowth in this sector's real value added.Thus, we have witnessed, mainly,financialdisintermediation, with little effect onaggregate saving rate and corporateinvestment and output growth rates. Thisseems similar to what happened in manydeveloped economies with financialderegulation about a decade ago. Allindicatorsof corporateprofitabilityshow adecline in 1980s.If our findings are valid, they appearsignificant.The widelyheld view of positiveeffects of stock market growth on theeconomy's real sector, perhaps, needs totaken with caution.Moreover, the findingsseem to raise many questions. How couldcorporatesectoraccess such large resourceswhenits profitabilitywas steadilydeclining?Whydid the shareof retainedearningdeclinewhen the corporatetax burden fell? Is thefall in profitabilityrelatedtodecline inshareof internal finance? Finally, and perhapsmore fundamentally,if capital markethaslittle relation to corporate investment rateand outputgrowth rate, what does capitalmarket growth mean for the economy? Isit, then, merely a side show?36Capitalmarketis notjust an institutionforresourcemobilisation,butequallyimportant,a marketforcorporatecontrolthatnecessarilyfollows. Assume that, over time, widelyperceivedcapital marketimperfectionsareovercome with better regulation andtechnology. Are we, then, prepared forcontestability of corporate managementthrough mergers and take-overs in thesecondarymarket?Assuming sucha marketis organisedefficiently, does it necessarilyimprove corporate performance? Thesewidely debated issues in developedeconomies seem to have an increasingrelevance for India.The Anglo-Saxon 'model' of corporategovernancereportedlyleadsto 'shortism'asinvestors have arms length relation withmanagers. Threat of take-over apparentlyleads managers to resort to short-sightedpolicies, at the expense of long-term goalofgrowthandtechnicalprogress.Incontrast,GermanandJapanesefirms,that have closelinks with their banks, are said to be freefrom such pressures to show immediateresults, and hence are able to take a long-term view of the firm's prospects.In other words, the critical question is,what sort of a marketeconomy we intendto move towards: is it the Anglo-Saxon'model' with the primacyof capital marketemphasising 'efficiency' andliquiditywiththe attendant shortism of corporatemanagements,or the GermanandJapanesestyles of bankcentriccorporategovernancewithlimitedroleforstockmarketbutprimacyto long-termgrowthandtechnicalprogress.37

These issues perhapscannotbe ignored anylonger.Notes

[Following the usual disclaimers,I thankSubirGokam, Veena Mishra, K V Ramaswamy,J CSandesara,S L Shetty, M H SuryanarayanaandRajendraVaidya fortheircommentsonan earlierdraft of this paper.I am particularlygratefultoCherian Samuel for his detailed comments andsuggestions.]1 In thispaper'capitalmarket'is usednarrowlyto refer to India's stock markets. Strictly,stock marketrefersto issuing and tradingofequities.Sincethebulkof resourcesmobilisedin Indianstock marketsare debt securities,we prefer, for convenience, using the termcapital market.2 Marketcapitalisationratio,is the marketvalueof all tradedshares,asa proportionof currentgrossdomesticproductat factorcost (GDPfc).This is a widely usedmeasureof stockmarketsize.3 Thoughthe secondarystockmarkethasgrownsubstantiallybothin absoluteandcomparative

terms,one has to recognise its narrowbase.In 1992-93, top50 firmsaccountforover two-thirds of trading volume in Bombay stockexchange thatdoes over 70 percent of tradingin all stock exchanges in India [CMIE 1994;Machiraju1995].4 A convertible debentureis a debt instrument,whichis (orcanbe) partiallyor fullyconvertedintoequityshare(s)atpredeterminedtimeandratio,as specified in the initial public offer.5 Increasedpromnoters'contributioncouldpartlybe anillusion,as thoseeligibleforcontributingto promoters'sharemayhave beenenlarged.Onesuspectsthatin aregimeof licensingandcapitalcontrolswithboomingsecuritiesprices,promoters'quota could have been used todispense favours,similarto Japan's'Recruitscandal' some years ago.6 In 1980s a numberof financialservices firmslike merchantbankers.underwriters,mutualfunds, custodial services, etc, came intoexistence, mostly by existing public sectorbanksandfinancialinstitutions.Some of themwere discredited in the 1992 stock marketscam. However, since 1991 private sectorfirmsincludingmanywithforeignoriginalsoentered these newer industries.Instrumentsare convertible debentures,varietyof mutualfunds, etc. See Machiraju (1995) fordescriptive details.7 This is anoverestimatedue to doublecounting.We know. a significant proportionof firmsis listed in more than one stock exchange inIndia. Bombay stock exchange, oldest andbusiestof all, listed 2,601 companiesin 1992[CMIE 1994]. This figure,we guess, is moreaccurate.8 Demirguc-Kuntand Levine's ( 1995) stylisedfacts seem to underestimatesize of India'sstock market. In their set of 41 countries,Indiaranks3 1st in marketcapitalisation,with16 per cent of GDP, during 1986-93.9 DocumentingIndia'sfinancialdevelopmentupto 1977,Goldsmith(I1983)said:"Theopencapital market has been only a secondarysourceof fundsforcorporatebusiness...Thus,the marketfor corporateissues seems not tohave developed since independence,and, in

addition, to have lost considerably inimportance"(pp 204-06).In describingIndia's financialsystemandstructure,Raj (1992) perhaps did not findcapital marketsignificant enoughto mentionit.10 Foreign Exchange RegulationAct (FERA),1973, requiredall foreign-controlledrupeecompaniesto diluteforeign equityholdto 40per cent, though the law's implementationdepended on the firms' relative bargaining

powervis-a-visthegovernment.However,inmost cases, these firmsdid notdisinvesttheirholding. Insteadthey issued fresh equities toIndianpublic,thus reducingtheirsharein thepaid-up capital. without losing theircontrolling interest in most cases.11 Rao's (1980) conclusion aptly reflects thedominant opinion before the capitalmarketboom, "...industrialunits havereliedheavilyfor finance on the publicfinancialinstitutionsand banks, and have raised relatively littlecapital from the market...withreorderingofprioritiesover the last decade, an increasingproportionof resources of the commercialbanks are channelled to other uses such asmeeting increased reserverequirementsand

credit to priority sectors... Industrialexpansion, therefore, must rely on raisingmorecapitalfrom themarket...industrialunitscan be...encouragedto meet their financingrequirementfrom a wide range of investorsthrough marketable securities that canassist in the developmentof capitalmarket"(pp 153-54).12 Observing that firms depend on banks andDFIs for finance, and households invest inbankdeposits,Patil(1979) arguedforgreaterparticipationof householdsector infinancingfirms'equitycapital.This ledtoaninterestingdebate,mostly by practitionersof finance,onthe needto developcapitalmarketas a sourceof risk capital. See also, Chitale (1980).13 Lall (1983) offers a criticalcommenton theassumptions underlying the Committee'srecommendationthatseemrelevantevennow.14 CMIE (1986) documents these changes inpolicies and procedures.15 WorldDevelopmentReport,1989highlightedsuccess of India's capital market reforms

[World Bank 1989: 108].16 To quote Cho, "In a credit market withimperfect information,liberalisationof thebanking system...would not, by itself, besufficient to achieve full efficiency... This isdue to the adverseselection effect (andalsothe moralhazardeffect) thatoccurswhendebtcontracts are used in the presence ofasymmetric information..Equity contracts,however, are free from adverse selectioneffects and could thus overcome inefficientallocation of capital when the same degreeof imperfect information on borrowersexists as in the case of debt contracts"[Cho 1986:198].17 To quote Keynes' well known remarkonWall Street, "... In one of the greatestinvestmentmarketin theworld,namely,NewYork, the influence of speculation...isenormous...Speculatorsmay do no harmasbubbleson asteadystreamof enterprise.Butthepositionis seriouswhenenterprisebecomesthe bubble on a whirlpool of speculation.When the capital developmentof a country



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becomes a by-product of the activities ofa casino, thejob is likely to be ill done. Themeasures of success attainedby Wall Street,regardedas aninstitution of whichtheproperpurpose is to direct new investment intomost profitable channels in terms of futureyields, cannot be claimed as one of theoutstanding triumphs of laissez-fairecapitalism..." [Keynes 1936].18 To quote Gerschenkron, "Depending on agiven country's degree of economicbackwardnesson the eve of industrialisation,the course and characterof the lattertendedto vary in a numberof importantrespects.Those variations can be readily compressedinto the shorthand of six propositions...Themore backward a country's economy, thegreater was the partplayed by institutionalfactorsdesigned to increasedsupplyof capitalto the nascent industries..." [Gerschenkron1962].19 Dore(1985) says, "TheseniorBritishmanager,it is said, is botheredabout the bottom linein his next half-yearly results: the Japanesemanagerabout his marketshare in five yearstime.TheJapanesemanageris moreconcernedwithlong-rangeplanning,more assiduousingatheringinformationabouttheprobablestateof markets and the directions to be takenbytechnological development over the long-term"(p 10).20 Quite at variance with the WDR view,Mayer's background study for the reportcautions against a benign view of stockmarket development. Tilting it provo-catively, Myths of the West Mayer (1989)makes following 10 observations, based onhis studies using corporate balance sheetdata:Retentions are the dominant source offinance in all countries (p 9)Thereare some markedvariations in self-financing ratios across countries. In UKand US more than three quarters ofinvestment is funded from retentions. InFrance, Japanand Italy, appreciablymoreis raisedexternally.CanadaandGermanylie somewhere between the two groups

(pp 9-10).In no country do companies raise sub-stantial amount of finance fromsecuritiesmarket (p 10).Banks are the dominantsource of externalfinance in all countries.Bank financeis particularlypronouncedinFrance, Italy and Japan. It represents asurprisinglysmall proportionof Germancorporatefinancing.UK investment has been consistentlyfinanced from retentions(91 per cent onaverage). Bank finance has contributedclose to zero (3 per cent on average) ona net basis.Thereis a stronginverse relation betweentheproportionofexpenditurefinancedfromretentions and bank credit.Securities markets have declined insignificanceas sourceof finance forBritishindustry. Trade credit increased inimportanceat the end of 1960s and early1970s.Small and medium sized firms areconsiderably more reliant on externalfinance than large firms. A smallerproportionof small than large company

finance comes from securities market.Bank(andshort-term)finance account forapproximatelytwo-thirdsof UKcompaniestotal debt butmore thanfive-sixth of smallcompanies debt.21 Demirguc-KuntandLevine(1995)is the othersignificantstudy thatcollects and comparesstock market development indicators in across-countryperspective,from 1986 to 1993.This study's focus is on the characteristicsofsecondarymarketandrelatesthemtofinancialdevelopment.22 Singhis verycircumspectontheimplicationsof this findings.However,on their basis IFCseems tojustify itseffortsin promotingstockmarkets in these economies.23 This is estimated using CMIE (1994) andDatta Roy Chaudhury(1992).24 These estimates are based on Datta RoyChaudhury(1992) and National AccountsStatisticns.25 These numbers should be interpretedcautiously.Privatelimitedcompaniesshouldnot besimplistically viewed as 'independent'and/or 'small' firms doing better thanlargeones. As Hazari had revealed long ago, asizeable proportion of private limitedcompaniesareclosely related to largefirms,in terms of ownership and nmanagement-often called 'satellite' companiesin popularparlance.Moreover,manyholdingcompaniesthatcontrol India'slargebusiness houses areprivatelimited companies.Very often, newerentrepreneurialgroupsthatemergein capitalmarketusually do so after theirsuccess witha number of privatelimited companies andfamily owned business.26 The average for the second half of 1980s isextendedby a yearto include 1990-91 as thismarksan end of a certainpolicy regime. Inthis and subsequent graph, we avoidinterpretingthe trendssince 1990-91, as thesaving estimate is disputed.27 Interestingly,the periodof rapidrise in theshareof financial saving ratio is associatedwithrapidgeographicalexpansionofbankingservices,thoughoffered negativerealinterestrates.28 During 1989-90 and 1991-92, public sectortax-freebonds formed40 percent of capitalmarketmobilisation.29 RBI's surveys of medium and large non-financial public limited companies, usinguniformdefinitions andconceptssince 1949,accounting for over four-fifths of privatecorporatesector's paid-upcapital and salesforms the basis of this study.Using RBI company finance data, DattaRoy Chaudhury (1992), has arrived at'population' estimates for the non-financialprivate corporate sector and relate them tonational income aggregates. Thus we haveconsistenttime series forabout threedecadessince the mid- 1950s.We also use RBI's flow of funds table for'private corporatebusiness'. This includesnon-financial private corporate sector plusnon-financialco-operativesector. Since thelatteris verysmall, privatecorporatebusinesscan be proxied for the corporatesector.30 These, we guess, are strictly comparable toMayer'sestimatesas we usecompanybalancesheet data, and on a -net'basis.31 Gross saving financed two-thirds of grosscapitalformationin privatecorporatebusiness

duringthe FirstPlan (1951-52 to 1955-56).The ratiocame downto a little overone-thirdin the Seventh Plan (1986-87 to 1987-88)[RamachandraRao 1989].32 But, unlikethen, whenDFIsusedtosubscribemuch of it as underwrites (as Goldsmithsuggested), in 1980s public seems to holdbulk of the fresh equity.33 Following Shanta's (1992) method, usingAnnual Survey of Industries, we estimateprivatecorporatemanufacturingvalue addedby subtractingproprietary and partnershipfirms' share from that of 'wholly privatelyowned' firms.34 According to Goodhart (1992),"disintermediationis...said to occur whensome intervention, usually by governmentagencies for purpose of controlling, orregulating, the growth of financial inter-mediaries, lessens their advantages in theprovision of financial services, and drivesfinancial transfers and business into otherchannels. In some cases the transfer offunds that otherwise would have gonethroughthebooksof financial intermediariesnow pass directly from saver to borrower"(p 683).

35 We arevery circumspectin interpretingthistrend,since I980s also witnessedanincreasein competition in industrialgoods marketsin response to gradual loosening ofinvestmentlicensingandimportrestrictions.36 This is a widely debated issue in recentliteraturedeveloped country context. For abriefreviewof theliteratureandfreshevidencefor the US, see Samuel (1996b).37 TheEconomist,(May5, 1990)in aperceptivelytitled survey, 'Capitalism: In Triumph,InFlux', raised some of theseissues, for a wideraudience.References

Bhide, Amar (1994): 'Efficient Governmentand Deficient Governance', HarvardBusiness Review, Vol 27, No 6, November-December.Centre for Monitoring IndianEconomy (1986):The LiberalisationProcess, Bombay.- (1992):KeyFinancialData onLargerBusinessUnits, Bombay.- (1994): Basic Statistics: India, Volume 1,Mumbai.Chitale, R P (1980): 'Finance for Industry',Economic and Political Weekly, April 26.Cho, Y J (1986): 'Inefficienciesfrom FinancialLiberalisation in the Absence of Well-functioning Equity Markets', Journal ofMoney, Credit and Banking, Vol 18.Cobham, David and Subramaniam (1995):'CorporateFinanceinDevelopingCountries:New Evidence fromIndia',Discussion PaperNo 9512, Centrefor Researchinto Industry,Enterprise,Finance and theFirm,Universityof St Andrews, Scotland.Demirguc-Kunt,Asli and Levine, Ross (1995):'Stock-marketDevelopment and FinancialIntermediaries: Stylised Facts', PolicyResearchWorking Paper 1462, The WorldBank, Washington, DC.Departmentof CompanyAffairs(-1995):AnnualReport, J994-9S,Ministry of Law, Justiceand CompanyAffairs,Governmentof India,New Delhi.

2562. Economic and Political Weekly Special Number September 1996


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Dimsdale, Nicholas and Martha Prevezer (eds)(1994): Capital Market and CorporateGoverntance,ClarendonPress, Oxford.Donaldson. Gordon (1961): Corporate DebtStrategy: A Study of CorporateDebt PolicyDeterminants fCorporateCapacity,HarvardUniversity Press, Boston.Dore R P (1985): 'Financial Structures and theLong Tenn View', Policy Studies, No 6, July.DattaRoy Chaudhury, Uma (1992): 'Financesof the Private CorporateSector: 1955-56 to1986-87', Journatl of Indian School ofPolitical Ecoionomy,Volume 4, No 4.Gerschenkron, Alexender (1962): EconomicBackwardness in Historical Perspective,Harvard University Press, Cambridge,Massachusetts.Goldsmith, Raynold W (1983): The FinatncialDevelopment of India, 1860-1977, YaleUniversity Press, New Haven.Goodhart, Charles (1992): 'Disintermediation',The New Palgrave Dictionary of Money andFinance, Volume 2, Macmillan, London.Government of India (1991): Report of theCommittee on the Financial System(Chairman:M Narasimham), New Delhi.Keynes, J M (1936): General Theory ofEmployment,Interest and Money, HarcourtBrace and Co, New York.Koch, Alfred R (1943): The Financing ofLarge Corporaitions,1920-39, NBER, NewYork.Lall, Vinay D (1983): 'Financing of PrivateCorporate Sector', Economic and PoliticalWeekly, August 6.Machiraju,H R (1995): The Workingof Stock-Exchanges in India, New Age InternationalPublishers,New Delhi.Mayer,Colin( 1989): 'Mythsof theWest:Lessonsfrom Developed Countriesfor DevelopmentFinance', WPS 301, The World Bank,Washington, DC.Mayer,Colin (1992): 'CorporateFinance', TheNew Palgrave Dictionary of Money andFinance, Volume 2, Macmillan, London.McKinnon, R I (1973): Money and Capital inEconomicDevelopnment,BrookingInstitution,Washington,DC.Morris, Felipe (1985): 'India's FinancialSystem: An Overview of its PrincipleStructural Features', World Rank StaffWorking Paper No 739, The World Bank,Washington, DC.Patil,R H(1979): 'Tax Treatmentof InterestCostin the Contextof IncreasingRelianceon DebtFinancing',Econonmicand Political Weekly,September22.PlanningCommission(1982):ReportoftheStudyGroupottFinancing f the PrivateCorporateSector in theSixthFive- YearPlan(Chairman:C Rangarajan),Governmentof India, NewDelhi.RajK N (1992): 'India:Monetaryand FinancialSystem', The New Palgrave Dictionary ofMoneyand Finance, Volume 2, Macmillan,London.Rao, D C (1980): 'The Structureof CorporateFinance and Some Related Policy Issues',Reserve Bank of India Occasional Papers,Vol 1 No 2.Rao, K S Ramachandra(1989): 'Financing ofSectoral Investment During Plan Period',Reserve Bank of India Occasional Papers,Vol 10, No 4, December.

Samuel,Cherian (1996a): 'The Stock Marketasa Source of Finance:A Comparisonof U Sand IndianFirms', Policy ResearchWorkingPaper 1592, The World Bank, Washington,DC.- (1996b): 'Stock Market and Investment:TheSignalling Role of the Market', PolicyResearchWorkingPaperNo 1612, The WorldBank, Washington, DC.Shanta,N (1991): 'Trendsin PrivateCorporateSavings, Centre for Development StudiesOccasional paper series, Trivandrum.Shaw, Edward(1973): Financial Deepening inEconomic Development,Oxford UniversityPress, New York.Singh, Ajit (1992): 'The Stock Market andEconomicDevelopment:Should DevelopingCountries Encourage Stock Markets?',UNCTAD/OSG/DP/49.- (1995): 'Corporate Financial Patterns inIndustrialisingEconomies: A Comparative

International Study', Technical Paper 2,InternationalFinanceCorporation,The WorldBank, Washington, DC.Singh, Ajit and JavedHamid (1992): 'CorporateFinancialStructuresinDevelopingCountries'.Technical Paper 1, InternationalFinanceCorporation,The WorldBank,Washington,DC.Stiglitz,JosephE(1991):'Government,FinancialMarketsandEconomicDevelopment',NBERWorking Paper No 3669.- (1993): 'TheRole of StateinFinancialMarkets',WorldBankResearchObserver,Proceedingsof the Bank Annual Conference onDevelopment Economics, 1993.World Bank(1989): WorldDevelopmentReport,1989, Washington, DC.Zysman,John(1983):Governments,MarketsandGrowth: Financial Systems and Politics ofIndustrialChange, CornellUniversityPress,Ithaca.

DEVELOPMENT,DISPLACEMENTANDREHABILITATIONJune 15, 1996

Draft National Policy for Rehabilitation:Objectives and PrinciplesB K SinhaEconomic Perspectives on Resettlement and RehabilitationSangeeta GoyalInvoluntaryResettlement: Survey of InternationalExperienceRoli AsthanaWhose Nation?:The Displaced as Victims of DevelopmentSmitu KothariDisplacement and the Law Usha RamanathanVasava Identityin Transition:Some Theoretical Issues RoxanneHakimDevelopment, Displacement and Rehabilitation:LocatingGenderEnakshi Ganguly ThukralMental Health Consequences of Displacement and ResettlementByron J GoodDislocation and Rehabilitation:Defining a Field Veena DasPublic Policy Responses to Development-InducedPopulationDisplacements Michael M CerneaDisplacement due to Miningin Jharkhand MathewAreeparampilDevelopment Projects, Displacement and Outcomes for Displaced:Two Case Studies S ParasuramanMachkund,UpperKolaband NALCOProjects in KoraputDistrict,Orissa

WilliamStanleyTribal Resistance in the Chhechhari Valley: A Field ReportNita MishraDraft National Policy for Rehabilitationof Persons:Displaced as a Consequence of Acquisitionof LandMinistryof Rural Development

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