Niti Aayog exploring ways to find balance between govt and corp debt markets: Bery

Niti Aayog is exploring ways to realign the balance between the very deep government debt market and the corporate debt market, a top official said on Friday.

The government think tank will also examine the possible impact of any moves that may be aimed at deepening the corporate debt market, its vice chairman Suman Bery said at an event.

"A balance that we are going to have to get right is between corporate debt and government debt, and exactly what that takes in terms of both fiscal adjustment and in terms of the liquidity in the corporate debt market. These are issues that we have been exploring at Niti (Aayog)," Bery said at an event organized by the SEBI-promoted NISM here.

The government securities market has been very deep for many years now, helped by policies like a mandatory statutory liquidity ratio (SLR) for banks which ensures that the government has adequate resources to carry out its developmental agenda. There is also a very active secondary market where such bonds are traded.

As against that, a lot of efforts have gone into deepening the corporate debt market which can serve as an alternative to bank borrowing for entities.

The government's net borrowing for FY25 has been pegged at ₹11.63 lakh crore, while entities have raised ₹7.3 lakh crore from the corporate debt market in the first nine months of the fiscal.

Bery also said that along with rising income levels, there is a need to ensure that financial literacy reaches more people, which will include efforts to ensure that an "excess focus" on safety does not push people into riskier portfolios.

He said SEBI will have to "aggressively" embark on an investor education as the willingness of Indian households to move into the riskier world of capital markets gets established.

India can adopt an approach that is a blend between a banking-dominated system and the riskier one dominated by capital markets, he said.

Explaining the two distinct approaches, Bery said the US approach is helmed by capital markets willing to back riskier ideas, while Europe has traditionally been a banking-system-led one.