India’s corporate debt market lags behind its equity market, with potential to unlock Rs 54 trillion in extra funding, a move that could accelerate the country’s journey towards a $20 trillion economy by 2036, according to Equirus Securities.
India’s corporate bond market could unlock about Rs 54 trillion in extra financing capacity if it moved closer to the scale seen in China, according to Equirus Securities, underscoring how far the country’s debt market still trails its equity market. The brokerage said Indian shares now trade at a market value equal to roughly 130% of gross domestic product, while corporate bonds amount to only around 18% of GDP.
That imbalance matters because India is trying to build a $20 trillion economy by 2036. Equirus estimated the target would require nominal dollar growth of about 18% a year, a pace that would also depend on stronger currency performance. Without meaningful rupee appreciation, the same growth trend would leave the economy closer to $14 trillion by 2036, the brokerage said.
Vishad Turakhia, chief executive of Equirus Securities, told ETBFSI that Indian equities are in a better valuation position than they were a couple of years ago, but further gains will still need support from both foreign and domestic investors. He said domestic institutional money has become a more reliable cushion during market corrections, yet the heavy pipeline of share sales means overseas participation may remain important, especially through primary issues rather than only in the secondary market.
Equirus also argued for greater tax parity between bonds and equities to help deepen the debt market. It said such changes could cut borrowing costs by roughly Rs 2.2 lakh crore a year, or about 0.63% of GDP, with wider economic effects adding another 0.9 to 1.3 percentage points to growth. The report also pointed to India’s small-savings pool, estimated at about Rs 24 trillion and expanding by 14% to 16% a year, as a force that can keep administered savings rates relatively high even when market yields ease.
On the equity side, Turakhia said earnings expectations had already been reset lower after geopolitical shocks earlier this year, leaving the bar easier to clear. He said several companies have since reported results 8% to 10% above consensus, including names in the Nifty 50, while smaller companies have fared even better. He expects banks, domestic cyclicals, select industrial groups and some mid-cap shares to stay relatively well placed, but said the next phase for both markets will depend on whether stronger financial activity feeds through to credit growth and private capital spending.
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