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.