agencies
Mumbai, May 24: Prime Minister Manmohan Singh on Friday called for increased efforts by the government and financial regulators to channelise domestic savings into financial assets 'to facilitate their deployment in the most productive uses'.
Speaking at the silver jubilee celebrations of the Securities and Exchange Board of India (Sebi) here, 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, which is 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, he observed.
For mobilising savings into productive uses, he was emphastic that 'retail investors should have the incentive to invest in financial assets'. Quoting a recent study which shows that a majority of Indian households do not participate in financial markets, he cited, "The geographic spead too is very skewed with the western region accounting for 55 per cent of all investors."
Even as moderation of inflation will help, Singh said introduction of inflation indexed bonds is an important effort in this direction. 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 the financial system. Singh complimented Sebi for successfully modernising the capital markets and bringing international best practices to India. At the same time, he said it 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. "India is in need of infrastructure funding of over $1 trillion in the 12th Plan period," he added.
Further, the Prime Minister also called for development of a strong corporate debt market in the country, saying, "To some extent, reduction in fiscal deficit is a prerequisite for this development as soverign debt crowds out private debt." Although efforts are being made to reduce fiscal deficit, he said, "As we succeed, we can expect the corporate debt market to expand."
Reiterating protection of investors' interest being central to Sebi's mandate, Singh said, "Our government remains committed to doing everything that is needed to strengthen Sebi, so that it can deliver even more effective enforcements." A book on the history of Indian securities market, titled 'Banyan Tree to e-Trading' was also released on the occasion.
Earlier, Sebi Chairman U?K?Sinha, in his address, termed unauthorised raising of funds by various entities from the public as a critical area of concern. However, to mark Sebi's 25 years, Sinha assured of strict action against such schemes and sought continuing support from the government for the benefit of the markets and investors.
NSE Vice-Chairman Ravi Narain and NSE's Managing Director Chitra Ramakrishna were also present. The total headcount of Sebi today exceeds more than 600.
"In the initial years, the journey of Sebi was quite tumultuous. It had to work as a change agent. These 25 years have been a great journey. Today, we are among one of the best regulators in the world," Sinha added.
Finance Minister P Chidambaram also spoke, while Deputy Prime Minister of Singapore, T Shanmugaratnam, was the guest of honour.
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