Goldman Sachs in its report Bonding the BRICS: A Big Chance for India?s Debt Capital Market released on Wednesday has estimated that the country?s total debt market could grow four-fold, from about $400 billion or 45% of GDP in 2006 to about$ 1.5 trillion , or some 55% of GDP, by 2016.

Within this, the non-government segment(financial institution and corporates) could grow nearly six-fold from $100 billion to $575 billion in 2016 (from 10% of GDP to 22% in 2016).Tushar Poddar, vice president , Goldman Sachs said the bond marker reforms would bring down the interest rates in India and capital inflow due to interest rates differentials would fall.

?We see now a capital flow happening from the US and also from the other emerging markets to India. From US, the capital flow to India is happening partly due to sub prime crisis but the major factor is India?s growth story. India with right economic measures can easily maintain 8% growth without creating any hyperinflation for next 10 years,?? he said.

Amongest the most important reforms in the development and deepening of the non-public debt capital- market(CM),where growth has been lackluster in contrast to a soaring equity market, said the report.

Considering that the stock of the listed non-public sector debt in India is currently estimated at about$21 billion, or about 2% of GDP-just a fraction of the public sector debt outstanding(around 35% of GDP) or the equity market capitalisation(now close to 100% of GDP).

According to the report latent demand for debt securities is growing as India?s insurance, mutual funds and pension sector experience rapid asset growth. But the authorities still impose heavy restrictions that are being lifted only gradually.

The supply of debt particularly of debt has not kept pace with growing demand. Sitting on high savings from individuals and corporates and flush with liquidity from overseas, banks have little incentive to explore public debt market funding avenues and are in turn generous providers of loans.

?However, beyond the questions of supply and demand, fundamental hurdle is the structure of the market itself ,?? pointed out the report.