The Economic Survey, presented by Finance Minister Pranab Mukherjee in Parliament today, came down heavily on the links forged between corporates and mutual funds and its negative impact on retail investors.
According to the Survey, “Institutional players and corporates constitute major players in the Indian capital market. The retail investor participation remains limited in the corporate debt market and mutual funds. The interdependence between corporate and mutual funds has recently raised concerns relating to volatility in financial markets.”
In the wake of the recent financial crisis, the Survey hinted at the interdependence of funds and corporates creating instability. Also, with corporates dwarfing the retail portion of the mutual fund assets, there was danger of this retail-investor-centric vehicle moving away from its mandate.
The Survey went on to voice its opinion on governance issues and the crucial need for investor protection and education so that they could take well-informed decisions and thereby protect their interest in a much better manner.
In Survey’s words, “A simultaneous and coordinated effort on both fronts would help investors take well-informed financial decisions besides protecting their interests and ensuring orderly conditions in markets. Greater effort therefore is needed for investor education and promoting investors’ protection.”
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