Mumbai, May 24 (IANS) Prime Minister Manmohan Singh Friday called for increased efforts by the government and financial regulators to channelise 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,” the prime minister said while speaking at the Silver Jubilee celebrations of Securities & Exchange Board of India (SEBI) here.
SEBI was established by the government in 1988 as a market regulator to safeguard the interests of investors and vested it with statutory powers under SEBI Act, 1992, when Singh was the finance minister.
He pointed out that a recent study has shown that majority of Indian households do not participate in financial markets, with the western region accounting for 55 percent of all investors.
He said that the Gross Domestic Savings as a percentage of Gross Domestic Product has fallen from 36.8 percent in 2007-08 to 30.8 percent in 2011-12, which was a matter of concern.
“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 the prime minister.
He said for mobilising savings into productive uses, retail investors should have incentive to invest in financial assets.
According to him, moderation of inflation would help while introduction of inflation indexed bonds is an important effort in this direction.
Towards this end, several steps have been taken to attract retail investors, like the Rajiv Gandhi Equity Savings Scheme (RGESS), and incentives for mutual funds to reach beyond the top 15 cities to deepen and widen the financial system.
Lauding the SEBI for providing a well-regulated capital market, the prime minister said it had successfully modernized our capital markets and brought international best practices to India.
He 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.”
Now, SEBI could also make a vital contribution to economic revival by taking a 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 in the 12th plan period.
The prime minister called for development of a strong corporate debt market in the country.
“To some extent reduction in fiscal deficit, is a pre-requisite for this development as sovereign 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,” Singh said.
Communications Minister Kapil Sibal released a commemorative stamp to mark the occasion.
A book on the history of Indian securities market, titled ‘Banyan Tree to e-Trading’ was also released.
Present on the occasion were Singapore Deputy Prime Minster T. Shanmugaratnam, Maharashtra Governor K. Sankaranarayanan, Chief Minister Prithviraj Chavan, and union ministers Namo Narain Meena and Milind Deora.
— Indo-Asian News Service