Dr. Manmohan Singh's Contributions to India's Securities Market
The late Dr. Manmohan Singh is celebrated for his significant contributions to India's economic transformation, particularly in laying the foundation for a modern securities market.
Creation of the Securities and Exchange Board of India (SEBI)
- Recognized the critical role of a modern securities market in channeling resources into the real economy.
- Designed SEBI as an empowered securities market regulator to operate independently from the government.
- SEBI was enabled by law to issue binding regulations and exercise autonomy over recruitment and financial operations.
- This autonomy marked a departure from prior government control characteristic of Indian public agencies.
Development of a Comprehensive Ecosystem
- Beyond creating SEBI, Dr. Singh focused on developing the entire ecosystem with necessary laws, institutions, and supporting environments.
- The 1992 SEBI Act laid the foundational legislative framework, further refined by 1995 to incorporate critical features of a modern regulator.
Creation of the AI industry
- Faced resistance from the Bombay Stock Exchange (BSE), which was owned by brokers and resistant to reforms.
- Launched NSE as a demutualised corporate exchange, seeded by IDBI, ensuring better corporate governance and avoiding ownership by trading members.
- Strategically used emerging telecom and IT infrastructure to transform NSE into a pan-India exchange.
Transition to Electronic Shares
- Required legislative changes and banking computerization to move from paper to electronic shares and money movement.
- The Depositories Act, 1996, was enacted, creating a modern depository to support this shift.
Enhancing Market Participation
- Facilitated the entry of foreign institutional investors into Indian equity markets to deepen market participation and diversity.
- Emphasized developing deep markets with robust legal frameworks and diverse participants.
Dr. Singh's Legacy and Current Challenges
- His reforms positioned India high on metrics measuring the size, depth, and regulation of equity markets.
- Highlighted the importance of opening up to globalization and embracing finance as a critical economic component from 1991 onwards.
- Warns of threats to this progress, urging political leadership to maintain a pro-globalization and pro-finance stance.