State with reasons whether you agree or disagree with the statement : Capital market plays very important role in Indian economy.

Answer: I agree with the statement.

The capital market is the market for medium-term and long-term funds. Its role in the Indian economy is:

1. Mobilisation of savings: It mobilises savings of households and channels them into productive investment.
2. Capital formation: By providing long-term funds it raises the rate of capital formation.
3. Industrial growth: Companies raise funds through shares and debentures for expansion and modernisation.
4. Liquidity: Through the stock exchanges, investors can easily sell their securities.
5. Funds for government: Government raises long-term funds through bonds for development projects.
6. Foreign capital: It attracts foreign investment (FDI and FPI) into the country.
7. Balanced regional development and employment: Funds for new industries help regional development and create employment.