Bihar State PCS

• 24 Apr 2024

No Manufacturing Unit from Bihar on Stock Exchange

Why in News?

Bombay Stock Exchange (BSE) has over 66.5 lakh registered investors. The third most populous State in the country, Bihar, does not have a single manufacturing unit listed on the stock exchange.

Key Points

• Data from BSE shows that, although Bihar accounts for just 2.65% of the total number of registered investors on BSE, it has witnessed a rise of over 10% in the last quarter and over 47% in 2023.
• Before the separation of Bihar and Jharkhand, the region encompassed both an agriculture-based and consumer-based economy, as well as a thriving mineral and manufacturing sector.
  • After separation, Bihar found itself predominantly relying on agriculture and consumer-centric industries. This transition had significant implications for Bihar’s economic landscape.
  • The absence of a robust manufacturing sector, coupled with limited access to essential resources, has hindered the state’s ability to compete on a national scale.
• To attract industry, in 2023 the State government organized Bihar Business Connect summit in Patna, where Memorandums of Understanding (MoUs) were signed for Rs 50,500-crore investment proposals.
  • The government showed opportunities in Textiles, leathers, IT/ITeS & ESDM, Food Processing, and Hospitality & Tourism sectors.
• Bihar is plagued with negative stereotypes and misconceptions that deter potential investors. Conducting roadshows, engaging in awareness campaigns, and leveraging platforms like CII can play pivotal roles in reshaping perceptions.

Stock Market

• Stock markets are venues where buyers and sellers meet to exchange equity shares of public corporations.
• Stock markets are components of a Free-Market economy because they enable democratized access to investor trading and exchange of capital.
  • A free-market economy is an economic system in which the prices of goods and services are determined by supply and demand, without interference from government regulation.
• India has two stock exchanges – the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
• Securities and Exchange Board of India (SEBI) is the regulator of the securities market in India. They set the legal framework and regulate all entities interested in operating in the market.
  • The SCRA (Securities Contracts Regulation Act),1956 has empowered SEBI to recognise and regulate stock exchanges and later commodity exchanges in India; this was earlier done by the Union government.