Such sops will undoubtedly help, but the question is whether concessions such as a safety net for the small investor are desirable. There is little reason why the investor should be insured against all risks. The basic problem with the primary equity is that the cost of equity is too high, which is why companies have put off their equity-raising plans. But good quality companies continue to access the market, thelatest example being the Gujarat Mineral Development Corporation. Companies with memories of the huge premiums they commanded during the 1994 boom are understandably hesitant about approaching the market at lower prices, but that is an attitude which they will sooner or later have to shed. The key to the development of a healthy primary market, however, lies in regulatory action to clean up the market. How many of the promoters who had so successfully duped investors in 1994 have been punished? Research has shown that even good companies are forced to underprice their offerings, since ill-informed investors unable to distinguish between good and bad issues will not pay high prices for good companies. Until and unless regulators are seen to be serious about disciplining dubious promoters, investors will continue to shy away from the primary market.