One of the major economic developments of this decade has been the recent takeoff of India, with growth rates averaging in excess of 8% for the last four years, a stock market that has risen over three-fold in as many years with a rising inflow of foreign investment. In 2006, total equity issuance reached $19.2bn in India, up 22 per cent. Merger and acquisition volume was a record $27.8bn, up 38 per cent, driven by a 371 per cent increase in outbound acquisitions exceeding for the first time inbound deal volumes. Debt issuance reached an all-time high of $13.7bn, up 28 per cent from a year earlier. Indian companies were also among the world's most active issuers of depositary receipts in the first half of 2006, accounting for one in three new issues globally, according to the Bank of New York.
The questions and challenges that India faces in the first decade of the new millennium are therefore fundamentally different from those that it has wrestled with for decades after independence. Liberalization and globalization have breathed new life into the foreign exchange markets while simultaneously besetting them with new challenges. Commodity trading, particularly trade in commodity futures, have practically started from scratch to attain scale and attention. The banking industry has moved from an era of rigid controls and government interference to a more market-governed system. New private banks have made their presence felt in a very strong way and several foreign banks have entered the country. Over the years, microfinance has emerged as an important element of the Indian financial system increasing its outreach and providing much-needed financial services to millions of poor Indian households.