through stock exchanges can be one of the most feasible options. the reserve bank had also allowed buying and selling of government securities through stock exchanges since 2003 to facilitate easier access and wider participation. trading volumes, however, continue to be very low in the exchanges. the working group on enhancing bis central bankers ’ speeches liquidity in the government securities and interest rate derivatives markets ( chairman : r. gandhi ) [ gandhi committee ] had examined this aspect and had made recommendations to simplify operational procedures for seamless movement of securities from sgl form to demat form and vice versa and permit banks and pds to obtain limited membership of stock exchanges for undertaking proprietary trades in g - sec on the exchanges to promote trading of g - sec on stock exchanges. reserve bank is examining the recommendations in consultation with all the stakeholders. it would be interesting to note that australia recently passed legislation to enable retail trading of australian government securities on the australian stock exchange. the australian government has put a mid – 2013 timeframe for trading to commence. all benchmark bonds issued by the australian government, including treasury bonds and treasury indexed bonds will be available for trading. in india, by improving access to order matching platforms and promoting safe clearing and settlement systems, widening access to retail investors is being pursued with vigour. factors inhibiting retailing of g - sec in the indian context penetration of g - sec to individuals could not be achieved mainly on account of the competition from other instruments, many of them having tax benefits, such as, small savings schemes from the government like savings bonds and national savings certificates ( nscs ). these instruments are targeted at the retail investors and the effective return on these instruments work out to be higher than the yield on marketable securities which have no tax concessions. the predominance of institutional investors and large borrowing needs of the issuer, i. e. “ the sovereign ” resulted in market is characterised by very large transaction size. though we have provided odd lot segment in nds - om for trading in small lot size, there are not many quotes available, thereby discouraging small investors. thus, the present market for g - sec is not well suited to retail / individual investors who trade in small amounts and are generally buy - and - hold investors. moreover, g - sec are not actively traded on stock exchanges. since volatility in prices of fixed - income securities is low vis - a - vis equity, investors generally gain through small changes in prices of debt instruments by committing large

decline in export demand for our goods and services. why was india hit by the crisis? there was dismay in india that we too were affected by the crisis, and this dismay arose mainly on two counts. first, the exposure of our banks to toxic sub - prime assets was marginal and their off balance sheet activities were limited, and so, the argument went, we should not have been affected by a financial sector crisis that originated from these causes. second, india ’ s growth is driven by domestic demand and a drop in external demand, it was contended, should have caused no more than a small dent in output growth. yet the crisis hit us, and did so more ferociously than we thought possible. the reason for this is globalization : india is more integrated into the global system than we tend to acknowledge. let me illustrate that point with some broadbrush numbers. india ’ s two way trade ( merchandize exports plus imports ), as a proportion of gdp, more than doubled over the past decade : from 19. 6 per cent in 1998 / 99, the year of the asian crisis, to 40. 7 per cent in 2008 / 09. note that global trade declined by 11 per cent in 2009 as a result of the crisis in contrast to a robust average growth of 8. 6 per cent during the previous few years 2004 / 07. such a sharp collapse in world trade had an impact on our export demand demonstrating that our trade integration was quite deep. if our trade integration was deep, our financial integration was even deeper. a measure of financial integration is the ratio of total external transactions ( gross current account flows plus gross capital account flows ) to gdp. this ratio had more than doubled from 44 per cent in 1998 / 99 to 112 per cent in 2008 / 09 evidencing the depth of india ’ s financial integration. in sum, the reason india was affected by the crisis, despite mitigating factors, is its deepened trade and financial integration with the world. managing globalization what the experience of the crisis demonstrated clearly was the power of globalization. globalization is a double edged sword ; it opens up incredible opportunities but also poses immense challenges. india surely benefitted from opening up to the world but had also incurred costs on that count. the challenge for india, and indeed for all emerging market economies ( emes ), is really to minimize the costs and maximize the benefits of globalization. bis central bankers ’ speeches lessons of crisis a lot is being written about how this crisis has