Indian corporates borrow at a premium close to 200 bps relative to their peers in other advanced and developing economies and that opening up the Indian economy to foreign debt capital could reduce this premium and thereby boost corporate profits by 7% and GDP by 1.3%.

This is the finding of the whitepaper titled as ?Life after the Great Escape: how India needs to use the global credit crisis as a platform for reform,? released by Noble, the research-led Anglo-Indian independent investment bank dedicated to small and mid-cap companies, together with City of London Corporation.

The study consider India?s successful warding off of the credit crisis, but emphasise the steps required to return to the high growth performance of recent years, involving the urgent initiation of meaningful reform. Also, it contends that although the stability dividend which India reaps from capital restrictions is evident in a crisis year such as FY09, the true hidden cost the country pays far outweighs such a stability dividend.

It estimates that by easing restrictions on FIIs, India will not only increase FIIs debt inflows to $13 billion per annum (as opposed to the current figure of $6billion per annum), but the country will also find that FIIs do not rush for the exits at the first sign of trouble.

Further, it identifies five deficient areas in the Indian financial landscape, which include missing markets, institutions, people, synergy and governance. Besides pitching for the opening up of the country?s debt capital market to foreign players, it stresses two other areas, viz, governance and financial areas as focus areas of reform. Moreover, the study makes a case for disinvestment to increase free float and market oversight over public sector entities.

The study makes a case for disinvestment to increase free float and market oversight over public sector entities.

It is emphatic in proclaiming the need for ensuring truly independent directors in the Boards and emphasises the need for strict and timely disclosure of important corporate information.

Finally, the study advocates reinvigorating the goals of the financial inclusion as it would also accord a greater stability to banks? funding sources apart from being an important public policy objective in itself.

Saurabh Mukherjea, head, Indian equities at Noble, says ?Change and reforms bring progress and development?. India is at the threshold of great opportunity and we are veryexcited to present this paper. We believe it elaborates an idea which if implemented, will bring a much-needed, boost to Indian debt capital markets. Our belief is that economically India is more at crossroads today than it was a year ago and initiatives such as the ones proposed by this paper are now a compulsion rather than an option, says Mukherjea.