During this month of I had an opportunity to visit Brazil as part of my executive MBA with ISB. It was an amazing experience to learn about another BRICS country. Both India and Brazil are close to each other on various fronts such as ease of doing business, ranking in Global Competitive Business and facing similar challenges of infrastructure bottlenecks, inflation, corruption, inequality etc., Though Brazil has natural advantage given its geographical area is close to 3 times bigger than India and population is 1/6th of Indian population. Brazil is 8th largest economy of the world whereas India is 4th largest. The GDP of Brazil grew 0.9% in 2012 and expects to grow by 4.5% in 2013. Bilateral trade between Brazil and India is around $8 bn in 2010 and expected to touch $10bn in the next couple of years. Brazil's economy is driven by consumption unlike savings in India. Brazil implemented cash transfer system for distribution of subsidies in early 2000, which has been very successful, and now India is planning to implement the same hope we will have similar results. We have a lot to learn from each other and we should, especially from the mistakes we make.
Supreme Court made harsh remarks recently while hearing one of the insider trading cases which said "SEBI, the market regulator, has to deal sternly with companies and their directors indulging in manipulative and deceptive devices, insider trading etc. or else they will be failing in their duty to promote orderly and healthy growth of the securities market. Economic offences, people of this country should know, is a serious crime which, if not properly dealt with, as it should be, will affect not only the country's economic growth, but will also slow the inflow of foreign investment by genuine investors and also casts a slur on India's securities market." It’s heartening to note the country’s apex judicial body is conscious of economic realities and priorities of the country. While SEBI has to be complemented for creating robust world class regulatory environment for capital markets in India in short span of 2 decades, on curbing and punishing insider trading, SEBI has not been very successful. SEBI is already working on revamping current insider regulations to deal more effectively with the menace of insider trading.
Of late, we keep witnessing ponzi schemes cheating gullible investors more often than earlier amassing thousands of crores. This is again due to lack of proper regulatory environment, poor enforcement and overlapping among various state and central agencies. These aspects are addressed in the recommendations of the Financial Sector Legislative Reform Commission (FSLRC). FSLRC proposes a Unified Financial Authority (UFA) to regulate all areas of finance other than bank and payments. Central Government should bring in UFA immediately to regulate all the financial products and services.Best regards Raghu Babu G [email protected] 30th Apr 2013