According to Vijay Kamani of Kamani Stock Broking Services (P) Ltd and a Lyons Range broker, the Indian economy is suffering from a serious lack of demand. ``While it is partly because of the sagging exports and because of asset deflation, it is also no less because of the lack of investment demand. The private sector has been given the responsibility of making investments in new ventures and they are constrained because of lack of capital,'' he says.

He further says in a paper titled ``Objectives and Issues in Primary and Secondary Markets'' that most of the bourses in the country are in a state offlux and a complete overhaul is required to attract investor confidence in secondary market. Consolidation of bourses and stock brokers is the need of the hour, he says.

The government should also make listing norms more restrictive, that is, only public worthy companies should get listing. Similarly, the large number of listed stocks at bourses which are obscure and not public worthy should be hived off to a separate bourse for this purpose, he said.

The size of the issue of new capital should not be more than 25 per cent of the cost of the project. Another 25 per cent should come from internal accruals and the balance 50 per cent via debt instruments. There should be no underwriting of shares as it instills a false sense of certification among the applicants.

In essence, he says that though the free market should be the order of the day, one has to ensure the quality at entry level, the accountability and fairness. The fairness of the capital market is the most important ingredient as it is the basisof trust and confidence of investors without whom there cannot be a capital market. While there is free market, one has to take cognizance that non-institutional investors are not expected to be as informed or knowledgeable about the intricacies of the capital market. The axiom of Caveat Emptor has to be pre-empted as an exception to the capital market, by denying the offering of large types of instruments to this segment, Kamani says.