At the best of times, rural India can’t seem to fathom what corporate India is about. But six months into its second term, the UPA government hopes to start bridging this gap. A new effort will try and give semi-urban and rural residents bottom-up training on how to participate in stockmarkets, buy and sell shares, invest responsibly, and, most importantly, make informed decisions on selling their land to industrial projects.
“Corporate and agricultural India will be able to understand each other better once this new investor education initiative gets under way,” avers corporate affairs minister Salman Khursheed. The programme will be financed by the Investor Education and Protection Fund (IEPF) and will begin early next year. “We want to demystify corporate structures for the average man so that, for instance, when land is acquired for industry, people don’t feel they’re losing their only asset. Awareness can help common interests converge,” he says.
The IEPF has a corpus of around Rs 500 crore—thanks to unclaimed bank deposits—and the mandate to educate investors everywhere. However, only a handful of investor education projects are funded by it at present. “Basic information on setting up, running, or investing in companies is not widespread,” says Virendra Jain, who runs an online investor grievance redressal helpline, one of only two funded by the IEPF.
In fact, only a quarter of 11,000 complaints received by Jain’s website (www.investorhelpline.in) were filed by SEC ‘C’ residents—the 450-odd smallest towns and cities. The government now wants to reach out to such places like Baripada, Gonda, Katihar, Namakkal, Unnao, Limbdi, Puttur and Tarn Taran—where a rising class of investors live.
As a first step, the government has decided to commission research into why Indians have not taken to the stockmarket in large numbers—only about 15 million demat accounts exist. At the same time, chartered accountants and other associations have been asked to organise investor awareness camps in smaller cities and semi-urban areas. The registrar of companies, NGOs and investor associations will chip in.
Frankly, few are hopeful of an overnight change. “It’s unlikely the government will be able to change the way India invests just by taking investor education to rural areas—it will also have to ensure shareholding itself becomes more broadbased,” argues L.C. Gupta of the Society for Capital Market Research and Development in Delhi. Gupta says small investors have encountered serious problems with the share demat system, for instance. Forget education, these infrastructure problems remain.
However, Ramesh Ramanathan, who runs the NGO Janaagraha in Bangalore, says the government’s idea need not be dismissed. “Only the government can impart this knowledge, and build systems for grievance redressal,” he says. Indeed, the government has access to resources that can aid investor education, such as banks, post offices and even private firms’ outreach centres. But no one is taking bets on implementation.
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