The emphasis on infrastructure projects, with their multiplier effect on the economy, is the right one. It is also true that exemption from the minimum public-offer limit and the minimum subscription limit is required if infrastructure projects are to find resources from the market. But it is a moot point whether infrastructure projects are attractive to the usual run of investors. The long gestation period of such projects rules out easy pickings in the short term. That is the reason why innovative financing structures are necessary, such asconvertible debt with sweeteners by way of warrants attached, or the kind of financing used by Essar and Reliance for their infrastructure projects. Most of the funding for such projects will have to come from institutional sources, who wouldn't mind taking a long-term risk. Further, the RBI's relaxations for financing against shares do not go far enough. While being allowed to fund promoters' contribution is a step forward, there are no market-makers in Indian stock markets except for the OTCEI, which in any case is practically dead. How then does bank funding for market-makers help? So far as financing brokers is concerned, the RBI has said that funding market intermediaries' own positions should not be encouraged. However, the decision to allow working-capital financing to brokers to fund the gap between delivery and payment for institutional clients will remove one major problem for brokers. And while the dematerialised route for new issues will reduce risks and cut down listing time, all these measurescan at best improve the prospects for new issues only marginally.

The key to reviving the primary markets lies in regaining investor confidence. That is unlikely to come about till corporate governance improves. The Shankar Acharya committee had pointed out that companies must be subject to shareholder discipline. Yet, little has been done on that front. For instance, the proposal to audit the end-use of funds raised from the market seems to have been put in cold storage. Unless company managements put the interests of shareholders first, the primary market is not going to reward them.