Do we need a single clearing corporation for debt/equity market in India

In a recent article by an economist of an Indian bank, it was argued that Indian stock/debt market are fragmented and we need to streamline the whole process. It is argued that "India needs to drastically prune the number of listed companies to ensure that only companies with traded stocks, reasonable volumes and better price discovery remain, while providing other platforms for smaller companies."

It may be true that establishment of a single clearing corporation for money, debt and foreign exchange and provision of demutualisation will widen and deepen capital markets. A robust insurance sector with higher capital base and more diverse products would generate long-term funds for investment in debt market and release resources for investment, particularly for infrastructure.

However the writer fails to acknowledge the real reasons of underdeveloped debt market and lack of participation of retail investors. Bond/Debt market is underdeveloped not because of the tedious procedures but lack of financial infrastructure and market participants. Percentage of retail investors is still low in India because of the scams that have happened during the last 6 years. A majority of retail investors are still apprehensive of investing in stock market and this is evident from a gradual fall in their participation during the last 6 years.

I agree that a single clearing corporation will streamline the process and will enhance the efficiency and price discovery however I do not see this attracting retail investors or developing bond market in India.