Niti Aayog recently highlighted that Government debt market is well developed in comparison to the Corporate Debt Market. 

• Debt Market is part of the securities market where debt securities (also known as ‘fixed income securities’) are issued and traded. 
• Major Issuers in this market include Central and State Governments, private companies, etc.

Status of Corporate Debt Markets 

• It constitutes more than 20 % of the Indian fixed-income universe (as per IMF (2023)). 
• It is the second largest segment, following government securities (68 %) (as per IMF (2023)). 
  • Government securities are a key instrument of the Government debt market. 
• Key Instruments: Bonds and Commercial Paper 
  • Commercial paper is an unsecured, short-term debt instrument issued by corporations to meet their immediate financial requirements.
• Primary Regulator: SEBI
• Opportunities: Provides borrowers an alternative to bank finance and can lower the cost of long-term funding.

Key reason behind the less development of Corporate Debt Markets

• Limited Investor Base, largely dominated by domestic institutions such as insurance companies, mutual funds etc. 
• Dominance of  private placement (securities are issued to a select group of people)
• Other: Corporate’s preference for Bank Lending, more risk of default in comparison to government securities etc.