It has also been argued that extending the period of short selling to be synchronous with the tenor of the futures contracts, may impart liquidity to the futures market by facilitating efficient arbitrage. However, the view that short selling, directly or indirectly, could pose potential risks and can easily destabilize the markets can’t be overlooked.
In India, with public sector spending being one of the dominant drivers of the economic growth and in the backdrop of heavily loaded government borrowing programme, and with a rather shallow market, it would need careful consideration to allow free short selling in the government securities market. IV. Currency futures market  45.