Insider Trading in Bharat: Appraising the Repercussions on Economic Participants and the National Exchequer

Abstract

This scholarly exposition delves into the multifaceted implications of insider trading on the economic constituents and the macroeconomic landscape of Bharat - our beloved India. Insider trading, epitomizing both unethical and illicit conduct, manifests as transactions carried out in the clandestine shadows of privileged knowledge, conveniently shielded from the public eye. This nefarious practice invariably gnaws at the bedrock of trust underpinning our capital market, imposing a deleterious toll on its expansion and the overarching economic equilibrium. The discourse meticulously unravels the immediate aftermath of insider trading, encompassing the distortion of market efficiency, the alarming erosion of investor faith, and the emergence of a skewed arena wherein a privileged few capitalise on the unsuspecting majority. The indirect ramifications extend to a contraction in market liquidity and a surge in risk, as investors, burdened with trepidation, retract their funds, or withhold future investments. The treatise attempts to quantify the fiscal erosion engendered by insider trading in India, transcending mere market capitalisation, and encompassing its broader ramifications on economic proliferation. The discourse elucidates how insider trading deters the influx of foreign direct investments (FDI), thereby tarnishing India's allure as an investment haven. The analysis further traverses the labyrinth of regulatory frameworks erected to thwart insider trading in India and their effectiveness. It accentuates the urgent imperative for rigorous enforcement of existing statutes, an enhancement of corporate governance standards, and an escalation of investor awareness to engender a more transparent and equitable financial milieu. In summation, this analysis emerges as an exhaustive compendium elucidating the pervasive fallout of insider trading on India's macroeconomic fabric and individual investors, while proffering strategic countermeasures to this scourge. It beckons our policymakers, regulators, and stakeholders to orchestrate a collective, concerted endeavour to fortify India's capital markets and secure their sustainable trajectory.