The Indian bond market: an analysis of plantation development bonds

Abstract

Capital markets in India have always been synonymous with equity markets. Since liberalization in 1991, the equity markets have stepped up in popularity as compared with India s debt market. The first part of this report deals with assessing the key differences between equity and bond markets of India and provides a comparison of India s markets with the rest of the world. In line with public policy, the second part of this study is aimed at understanding India s plantation sector and the challenges faced by it. Specifically, the concept of Plantation Development Bonds has been studied and various issues relating to the design, implementation of such bonds have been analysed. Finally, specific sectors in the plantation industry have been looked into with the view of identifying bankable projects that justify the issue of plantation development bonds. Key issues such as credibility of the issuer, volatility of commodity prices, ownership norms in the Indian plantation sector, underlying projects to justify returns, and the like have been analysed. With the help of a case study on investment in the Wind Energy sector, it is further an aim of this study to strengthen the case for issue of such bonds for the benefit of the plantation industry