Inter Relationship Between Investors’ Protection and Economic Development

 Inter Relationship Between Investors’ Protection and Economic Development 

1. Maintaining the Flow of Capital:

Investors in India are mostly middle-class Sanjay. So they want the security of the invested money and a certain refundable profit from it over a certain period. If investors do not get expected dividends or if they are worried about the safety of their invested money then they will not want to invest. As a result capital flow will stop. If the flow of capital stops, the industries will have difficulty raising short-term and long-term capital. Otherwise, the economic development of the country will be disrupted. Hence, financial prosperity is inextricably linked with the financial security of investors.


2. Maintain the Flow of Production:

The capital of industrial enterprises is raised from the money invested by the investors. If investors do not invest in industrial enterprises due to a lack of security, production will stop due to a lack of capital, and the economic system of the country will suffer. Otherwise, if the supply of capital is assured, production will increase and the economic base of the country will be strengthened.


3. Increase in Total Income:

Investors should never feel that they are likely to be defrauded. If they are assured of returnable profit and security of their invested money then the investment amount increases. If the amount of investment increases, the continuity of production is maintained and new employment is created. As a result, the overall income of the country increases.


4. Pension:

After retirement from work, many organizations have no obligation to pay retirement benefits. In that case, for a normal life after retirement, retirees want to invest their retirement money in one of the sectors with the hope of a certain income. In this situation, retirees naturally want security for their investments. If their income is guaranteed, demand for consumer goods will continue, and production will continue to meet demand.


5. Creation of Investment Atmosphere:

A sound investor protection framework creates an investment climate. If the investors are assured of their financial security then they are encouraged to invest as well as distribution of investment securities at low cost can be arranged. Thus, a bridge can be built between the investors in the investment market and the users of the invested money. This results in the overall economic development of the country.

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