How much is too much is a question that has never been satisfactorily answered when it comes to growth numbers. In 1992, the two settlements were clubbed and stock markets were closed when trading volumes hit a record high of Rs 500 crore. It surely would have been tough to imagine then, that the same market will manage Rs 1,30,000 crore in a single day, in a rolling settlement. The Sensex crossing the 1000 mark did not get even a fraction of the media attention that it now gets for every new level, because no one then believed that the index could reach these levels. The projections for software exports in 1997 was 4 per cent growth per annum and the expectation even 3 years later, was for demand to fizzle out after the y2k issue was tackled. Cell phones were expected to achieve a 5 per cent penetration in 10 years, and numbers like a million connections a month were tales of fantasy. Indulging in guessing games of how much FII flows is ‘right’ and how much of capital flows are ‘excessive’ fall in the same category. We simply do not know.

What we do know is that if we are able to put in a clearing corporation and a world class trading mechanism that cared more about the ‘how’ of transacting on an exchange, rather than the ‘who’, we could achieve better preparedness for growth in volumes. The participatory notes (PN) debate has spent so much energy in describing both the ‘who’ and the ‘how much’ on the assumption that regulating these are important.

... contd.