Prime Minister calls for increased efforts to channelize savings into productive investments.
Mumbai : May 24, 2013
Prime Minister Dr Manmohan Singh has called for increased efforts by the government and financial regulators to channelize domestic savings into financial assets. "The imperative of growth requires an increasing proportion of savings getting channelized into financial assets, to facilitate their deployment in the most productive uses" he said while speaking at the Silver Jubilee celebration of Securities and Exchange Board of India, SEBI in Mumbai today.
Dr Singh said, the Gross Domestic Savings as a percentage of GDP has decreased from 36.8 per cent in 2007-08 to 30.8 per cent in 2011-12."It is a matter of concern that financial savings as percentage of GDP have declined recently. In times of uncertainty, doubts often arise regarding the likely return on financial assets and individuals prefer to hold physical assets like gold and housing" observed PM. He said for mobilising savings into productive uses, retail investors should have incentive to invest in financial assets.
Dr Manmohan Singh said, moderation of inflation will help, while introduction of inflation indexed bonds is an important effort in this direction. He said, a number of steps have been taken to attract retail investors like introduction of Rajiv Gandhi Equity Savings Scheme, incentives for Mutual Funds to reach beyond top 15 cities, in order to deepen and widen financial system .
A recent study has shown that majority of Indian households do not participate in financial markets. The geographic spread too is very skewed with the Western Region accounting for 55 per cent of all investors.
Prime Minister Singh complimented SEBI for providing a well regulated capital market, and said it has successfully modernized our capital markets and brought international best practices to India.
Dr Sing said SEBI can also make a vital contribution to the revival of the economy by taking a lead role in establishment of Infrastructure Debt Funds by offering supportive regulatory environment. He said
India is in need of infrastructure funding of about 1 trillion US dollars in the 12th plan period.
Prime Minister also called for development of a strong corporate debt market in the country. He said, "to some extent reduction in fiscal deficit, is a pre-requisite for this development as soveriegn debt crowds out private debt. Efforts are being made to reduce fiscal deficit and as we succeed, we can expect the corporate debt market to expand"
Dr Singh reiterated that protection of investors interest remains central to the mandate of SEBI. "Our Government remains committed to doing everything that is need to strengthen SEBI, so that it can deliver even more effective enforcement.
Speaking on the occasion, Finance Minister P Chidambaram said that due to the efforts of SEBI India today has one of the best regulated capital markets in the country. He said regulatory and surveillance systems have kept pace with market developments and the investor confidence is high. He called upon SEBI to be a fearless regulator, and not to bend before anyone.
On this occasion, a commemorative postage stamp on 25 years journey of SEBI was released by India Post in the presence of Union Minister for Communication and IT, Kapil Sibal.
A book on the history of Indian securities market , titled ‘Banyan Tree to e-Trading’ was also released.
SEBI, was established by the Government of India in 1988 as a market regulator to safeguard the interests of investors. It was vested with statutory powers after the SEBI Act was passed in Parliament in 1992, when Dr Manmohan Singh was the Finance Minister. Today, it is armed with quasi-executive, quasi-judicial and quasi-legislative powers, and has met with adequate success in pushing systematic reforms. Introduction of Demat, which did away with physical certificates prone to postal delays, theft and forgery is among the key achievement of SEBI. It has also simplified and brought down the settlement cycle and is credited with fostering the mutual fund industry with initiatives like simpler KYC (Know Your Customer) norms and widening the distribution network in rural India by roping in postal agents. SEBI’s presence has also reassured the Foreign Institutional Investors (FIIs), who have been active in Indian stock markets.
On the momentous occasion of SEBI's silver jubilee, the Deputy Prime Minister of Singapore, who is also the Minister of Finance, T Shanmugaratnam was the Guest of Honour. Governor of Maharashtra, K Sanakaranarayanan, Chief Minister Prithviraj Chavan, Union Ministers Namo Narain Meena and Milind Deora were among the dignitaries present.