According to a CRISIL Rating report, how much is the corporate bond market expected to grow by Financial Year 2030 in India ?

Question

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Correct — B, ₹ 100-120 lakh crore. The number comes from a CRISIL Ratings press release dated 4 December 2023, headlined 'Corporate bond market to more than double by fiscal 2030', which states that the agency 'expects outstanding size of bond market to more than double from ~Rs 43 lakh crore as of last fiscal to Rs 100-120 lakh crore by fiscal 2030'. Two features of that sentence settle the question. First, the projection was published as a band, and only one option reproduces the band CRISIL actually printed; the other three are plausible-looking ranges that appear nowhere in the release. Second, the arithmetic is checkable even if you have never seen the report. 'More than double' from a base of about ₹43 lakh crore puts the floor above ₹86 lakh crore, which kills ₹ 50-70 lakh crore outright, while ₹ 120-150 lakh crore would describe something closer to a trebling than a doubling. That leaves ₹ 70-90 lakh crore as the only serious rival, and it is the near miss built for a candidate who remembers 'doubling' but has lost the base figure. The reasoning behind the projection is worth carrying with the number, because that is what a follow-up question will test. CRISIL notes the market had already compounded at about 9 per cent a year over the preceding five fiscals; it foresees capital expenditure of roughly ₹110 lakh crore across the infrastructure and corporate sectors between fiscals 2023 and 2027, about 1.7 times the previous five years, and expects the corporate bond market to finance about a sixth of that. On the demand side it points to the financialisation of household savings and to insurers and pension funds as the patient capital that long-tenure infrastructure paper requires.

Why the other options are wrong — (a) Barely more than the ₹43 lakh crore base the report starts from, so it cannot describe a market that 'more than doubles'. It is the option for a candidate who has vaguely registered a large rupee figure attached to bonds and picks the most conservative-looking band on the list.  (c) The near miss, and the one to guard against. It sits just under twice the ₹43 lakh crore base, so it looks like a doubling until you notice that its whole range falls below ₹86 lakh crore. CRISIL's own headline word is 'more than double', which places the projection above this band, not inside it.  (d) An over-correction. This range is roughly three times the base, and nothing in the release supports a trebling by fiscal 2030 — the growth path described is a continuation of an approximately 9 per cent compound annual rate, not an acceleration to that scale.

Concept: A corporate bond is a debt security issued by a company: the buyer lends money for a fixed tenure at a stated coupon and is a creditor of the company, not an owner of it, which is the essential difference from a share. Two different quantities get reported about this market and they are constantly confused. Annual issuance is how much new paper companies sell in a year; outstanding size is the total value of bonds alive in the market at a point in time, and it is the outstanding number CRISIL is projecting here. India's corporate bond market is small relative to bank credit, and issuance runs overwhelmingly through private placement to institutions rather than through public issues, which is why the investor base matters so much to any forecast of its growth. Insurers and pension funds are the natural buyers of long-tenure infrastructure paper because their own liabilities are long, and CRISIL's projection turns on those patient-capital pools growing while infrastructure bonds become more acceptable to them. The regulatory split is worth knowing too: the Securities and Exchange Board of India regulates corporate bond issuance and trading, while the Reserve Bank of India manages the government securities market.

State PCS 2024 Q45 — Economy PYQ with Answer

State PCS 2024 Q45 — Economy PYQ with Answer