The Survey has also suggested promotion of retailing of government securities.

"There is a need to take steps designed to enhance the volume of transactions in the stock index futures, which is now less than one per cent of that in the cash market," according to the survey.

In contrast to the developed markets, where institutional investors, particularly mutual funds, pension funds and insurance companies, rely on stock index futures to management stock market risk, their presence in the Indian derivative market is negligible. Net foreign institutional investors in debt market is also negligible. The domestic banking and insurance companies still account for the bulk of investment in government securities.

The technical group on new derivate products set up by the Securities & Exchange Board of India (Sebi) recently recommended various measures for increasing volume of transactions. These include use of the system of sub-brokers for trading and measures to attract institutional investors. The overall scenario in the capital market was not encouraging in April-December 2000.

Market capitalisation on the Bombay Stock Exchange declined 25 per cent from Rs 9,128 billion in March 2000 to Rs 6,926 billion by December 2000. Market capitalisation on National Stock Exchange was also lower by around 25 per cent at Rs 7,604 billion in December as compared to Rs 10,204 billion in March last year. The Survey points out that the fall in market capitalisation has been more serious in new economy companies.

Fund mobilisation from public and rights issue during the period declined to Rs 4,240 crore from Rs 5,723 crore during the April-December 1999 period. Funds raised from equities market declined 21.9 per cent to Rs 2,736 crore while mobilisation in the debt market was 32.3 per cent lower at Rs 1,504 crore during the period.

Net resource mobilisation by mutual funds almost halved to Rs 6,846 crore during April-December from Rs 12,193 crore during the same period of 1999. This was due to sharp increase in redemption/repurchase to Rs 53,776 crore from Rs 23,720 crore.

The Survey said domestic companies, especially those in information technology sector, raised about $696 million through American Depository Receipts (ADRs) and Global Depository Receipts (GDRs) during first eight months of the current fiscal, which was higher than the net investment by foreign institutional investors (FIIs) in the first nine months.

Net FII investment, in both debt and equity, declined to $465.90 million in April-December 2000 from $1471.21 million in April-December 1999. However, net FII investment in January rose sharply to $865.30 million, which was much higher than previous nine months put together.

The Union government's gross market borrowings till January 16, stood at Rs 1,05,433 crore, which is about 90 per cent of the budgeted amount of Rs 1,17,704. As much as 89.30 per cent of the money was borrowed via dated securities while the balance was mobilised through 364-day treasury bills. After adjusting Rs 36,500 crore for repayments, redemptions, net borrowing of the Centre stood at Rs 68,933 crore or 90.20 per cent of the budgeted net market borrowing of Rs 76,383 crore.