Mumbai: Committing to strengthen Sebi, Prime Minister Manamohan Singh Friday asked the capital market regulator to eliminate insider trading and take steps to encourage small investors to invest in equities.
"... Regulation should be guided by the need to increase transparency and lead to higher investments being channelised into productive endeavours, which strengthen our economy," he said at the silver jubilee celebration of Sebi here.
"Our government remains committed to doing everything that is needed to strengthen Sebi so that it can deliver even more effective enforcement," he said.
Calling upon Sebi to upgrade and improve itself, Singh said, "A key indicator of Sebi's future effectiveness will be its ability to root out the hard-to-define but extremely pernicious disease of insider trading."
The Prime Minister said: "Mobilisation of household savings into productive investment in the capital market must be a key goal for everyone in the financial sector."
Concerned over poor participation of households in financial market, the Prime Minister said the retail investors must be provided incentives to invest in financial assets such as securities, insurance products, banking and pension products.
The initiatives like Rajiv Gandhi equity savings scheme, inflation indexed bonds and various steps announced by SEBI, he hoped "will enthuse retail investors to access capital markets, increase financial intermediation, widen and deepen our financial system and positively influence the distribution of savings in favour of financial assets."
SEBI can also make a vital contribution to the revival of the economy and towards laying the foundations for more rapid growth by facilitating infrastructure related investment, he said.
India needs infrastructure funding of about USD 1 trillion in the 2012-17 plan period.
"Out of this, about 50 percent would have to be met by the private sector and our financial institutions. I would urge SEBI to take a lead in ensuring that infra debt funds (IDFs) are established and that they face a supportive regulatory environment," Singh said.
The Prime Minister also said that Sebi has been working to make it easier for foreign investors such as sovereign wealth funds, university funds and pension funds to invest.
"This is an area which needs priority attention, particularly in view of the current macro-economic environment in our country. I would urge SEBI to quickly bring to fruition the initiatives that are already underway in this regard," he said.
Appreciating efforts of Sebi towards enhancing access of mid-cap and small tier companies to capital markets, he said he hope to see more such efforts in the future.
"For our growth story to be truly sustainable in the years to come, small and medium enterprises would need to become a key segment of the Indian economy. They must be facilitated and helped to grow and expand with greater ease," he said.
Admitting that corporate debt market is not large and liquid, Singh said to some extent the reduction in the fiscal deficit is a pre-condition for development of this market since sovereign debt often crowds out private debt.
"Efforts are being made to reduce the fiscal deficit and as we succeed we can expect the corporate debt markets to expand. But we need other initiatives also to help this process," he added.
Apart from high-level panel discussion on economic and market related issues, the celebration also included an enterainment programme by TV artist and satirist Cyrus Broacha.