- What is Capital market, Primary market and Secondary market?
- What’s the problem with Capital market?
- Why do Indians not invest in sharemarket?
- What is financial Education?
- National Strategy for Financial Education
- $1 trillion investment in Infrastructure projects
- Technical stuff:
- What is Financial Stability and Development Council (FSDC)?
- What is financial inclusion?
- Every businessman requires money to start or expand his business. There are only two legit ways to arrange money: Debt and Equity (already saw in older articles). The place where (big) businessmen arrange money for long term investment, via Debt (Bonds) or Equity (IPOs) is called “Capital Market”. Government also arranges for money by selling bonds here.
- It has two subparts: Primary and secondary market.
- The first time (fresh) sale of Bonds or IPOs are done in a place called “Primary market”
- Suppose I buy that bond / IPO and then sell it to you, it’s called “Secondary market”. (used car sales). Anyways, These are only theoretical classifications so the experts can evaluate how market or economy is performing. Otherwise all the buy and sell is done via online.
- More than 50% of the money invested in Capital Market belongs to FIIs. They tend to take away their money as and when they find better investment opportunity in other countries. This makes the market quite volatile AND, weakens the rupee. The businessmen find it very hard to arrange for the money.
- Most of the Indians donot invest in Capital market. They just put their money in gold, real estate pension plans, post office savings or Fixed Deposit.
- The money is good for economy ONLY if it keeps circulating. For example, you buy gold and just store it in your locker- it is of no use to economy. But if instead of buying gold, if you give the same amount of money as loan to xyz businessman (or start your own business), that helps the economy- creates employment and gets you extra income.
- Besides, Gold purchase increases current account deficit. (we already saw this multiple times hence not elaborating again.)
- Because most of them do not have “Financial Education” (or enough money).
It is the knowledge and understanding of key financial products you need throughout your adult life.
- bank accounts,
- retirement savings plans
- stocks, bonds and mutual funds.
- understanding basic financial concepts like compounded interest,
- present and future value of money,
- Investment return, risk, protection and diversification.
Because Government is contemplating about a “National Strategy for Financial Education”
The aim Is to educate the people about these things, so they start investing in capital market. Hitting two birds with one stone
- People gets more return on investment
- Businessman can arrange money easily.
Mohan and Montek earlier wanted an investment of 1 trillion dollars in infrastructure (haha really!),
Now Montek says “not possible because
1. Foreigners are not investing thanks to bogus reputation of Government.
2. We had made the 1 trillion figure when 1$=44 rupees! Right now the situation is totally different!
Mohan: “koi baat nahi, if the outsiders are not coming then apno ko hi bottle mein utaar lete hai, by educating them about financial education!”
Montek: but how does it relate with each other??
Infrastructure means highways, powerhouses, irrigation, damns, nuke plants etc.
To build such things, Government / private player will need truckload of money. Most of the big foreign players are not interested in this, after seeing what happened to telecom companies and POSCO.
Mega Infrastructure projects are usually financed either by
- total Government funding or
- by PPP/ Joint Ventures between the Government and private comany or
- via “Bonds”.
Now you get the connection. Why would Mohan / Montek want indian junta to be educated about financial education? And why did not they think about it 8 years ago?
National Strategy for Financial Education is being drafted by a sub-Committee of Financial Stability and Development Council (FSDC).
A gang headed by Finance minister of India. The chiefs are RBI, SEBI, IRDA etc are the gangsters.
But RBI, SEBI and IRDA now says “first take a survey that how much financial education and inclusion do the Indians have, so that we can arrange for resources, booklets, advertizements, syllabus and MCQs accordingly!”
Financial education already explained above.
It roughly means getting all the poor people in the banking and insurance net.
Because if they don’t have a DEMAT account in the first place, how the hell are you going to make them invest in capital market?
Anyways this is just another scam coming –
Mohan: ya according to our scheme, we’ll give money to State Governments and they’ll give money to district officials and Jholaachhap NGOs, to educate the schoolchildren, College kids (if they’ve time in between Indian Idol and sending more than 200 SMS per day), and common men.
For each person participating in such seminar and opening a bank / DEMAT account, we’ll give Rs.200 to the concerned NGO, District office for the Administrative expenses.
District officials, jholachhap NGOs, wife-beater Panchayat members and bootlegger Municipal corporators (all in one voice): ya, now we just have to create ghost muster-roll and eat up all the money meant for the beneficiaries, just like we do/did in IAY, PDS, TRYSEM, MNREGA, SGSY and 50 dozen other schemes named after Nehru Gandhi family! Indeed Whaat an Idea Sir-ji!