The
Prime Minister Shri Atal Bihari Vajpayee launched the Securities
Market Awareness Campaign, organised by the Securities and Exchange
Board of India, here today. The Prime Minister emphasised the
need for concerted efforts to motivate and educate savers and
investors to put their money into shares and bonds so that the
economy benefits through a vigorous and dynamic capital market.
The Finance Minister Shri Jaswant Singh, Governor, Reserve Bank
of India, Shri Bimal Jalan were also present on the occasion.
Following is the
full text of the PM’s address:
I am very happy to
be here with all of you this morning.
India has had a long
and indigenous tradition of savings and entrepreneurship. Even
when India was not free we were always quick to adopt and develop
the most contemporary ways to channel savings into profitable
business ventures. No wonder, we set up the first stock exchange
in Asia. I have a pleasant memory of my visit to Jeejebhoy Towers,
the home of the Bombay Stock Exchange, when it celebrated its
125th anniversary. The tall building of BSE is in many
ways a symbol of India’s aspiration as well as potential to be
a leading economic power in the world.
The Indian economy
has proved its strength and resilience. Ours is one of the fastest
growing economies in the world. Today, I pay tribute to the contribution
of the capital market to the remarkable growth of Indian businesses.
Many of them have proved their worth in the face of adverse business
conditions as well as tough international competition. Their growth
was fueled by the moneys that they raised on the stockmarket.
The confidence they created led to a rapid expansion of the investor
community in India. Terms like Sensex began to be talked about
even in small towns. Therefore, the present lull on BSE and NSE
should not blind us to the intrinsic strengths of our capital
market.
At the same time,
the prolonged quiet in the stockmarket has tested the confidence
of the small investor, who is the backbone of the securities market.
If investors are not attracted, then companies will not be able
to raise money through the capital market. The Indian household
investor, of late, has been putting much of his savings in non-financial
assets. Even within financial assets, most of the savings are
going to the banking system. This is not the best or the most
productive use of our savings.
Therefore, we should
all make concerted efforts to motivate savers and investors to
put their money into shares and bonds so that the economy benefits
through a vigorous and dynamic capital market.
Today, it is pertinent
to ask ourselves: why is the investor shying away from the market?
The core issue is investor confidence. To build this confidence,
we need to make people aware of the different investment options
available in the market. They should also be made aware of the
regulatory safeguards that we have recently put in place to protect
their legitimate interests, including ensuring SEBI’s independence
and professionalism.
It is for this reason
that I wholeheartedly commend SEBI for launching a nationwide
awareness campaign for the first time. It is especially heartening
to note that the campaign is directed at small investors. Large
individual or institutional investors do not need such campaigns.
They have access to all the sophisticated information that they
need. It is ordinary savers who need to be attracted to the market;
and once attracted, retained despite the normal ups and downs
that are natural to this type of investment.
Today India can boast
of one of the most modern capital markets in the world, where
almost all trading is paperless. Information and communication
technologies have enabled investors, including small investors,
to buy and sell shares almost instantaneously, wherever they are.
However, while the
technology and the regulatory framework of capital markets has
improved, I am pained to say that the standards of corporate governance
have not kept pace. Of course, we have several companies that
have become role models of good corporate governance. These companies
have earned national and international acclaim.
However, there are
also many more companies that often use questionable and even
illegal means to achieve their ends. In recent years, we have
come across far too many instances of companies that have raised
money from the market by creating hype and then defrauding their
investors. Many of them issued shares at a hefty premium; most
of their scrips are now trading well below their face value. Stockmarket
scams brought a bad name to the Indian business community.
This is how boom
became bust and hopes turned to dust for many gullible investors.
And this is how the investor community lost confidence in the
market, leading to prolonged stagnation. This is how investible
savings turned to non-financial assets or safe bank deposits.
The fact that very few companies have tapped the primary market
in recent years is certainly a cause for worry.
The travails of UTI
must have caused heartburn to millions of small investors, especially
those from the middle class and senior citizens. Our government
has recently completed a major revamp of the UTI, in which we
have taken every care to protect the interests of small investors.
Therefore, we have
to learn the right lessons from our experience of the past few
years. We need markets that are known for their safety and integrity.
We need knowledgeable investors. And we need to build a sustainable,
high-growth economy, which will ensure better living conditions
for our people, now and in the future.
I quote here from
Kautilya’s Arthashastra, "The root of wealth is economic
activity and lack of it brings material distress. In the absence
of fruitful activity, both current prosperity and future growth
are in danger of destruction". Even in the 21st
century, Kautilya’s words are relevant.
A high rate of domestic
savings, channeled into productive investments are important to
achieve the eight percent growth in GDP that we have set for ourselves
in the Tenth Plan. Indian industry needs large capital to attain
this growth rate. For that, we need to encourage present savers
to save more and also to bring in new savers.
With economic liberalization
and globalization the market is becoming more important, and foreign
investors have also become major players in India. In a deregulated
market, the regulator has to be highly alert and alive to new
developments, both domestic and overseas, that can take place.
I want you to make
sure that financial security should not be the privilege of a
few but can be the hope of every Indian citizen. Financial literacy
is an essential tool to turn this hope into reality. While expanding
financial literacy, my first advice to you all is to make sure
that your investor awareness campaign has no jargon and complexities.
My second advice
is for you to bear in mind that India is a diverse country with
different languages. Most Indians do not know English. But that
does not mean that they do not have investible savings. Many of
our rural areas have become thriving centres of prosperity. Therefore,
you need to introduce this financial literacy campaign in all
regional languages and in Hindi. Here you should work closely
with the dynamic and fast growing regional media, both print and
electronic.
Investor education
is not the domain of the Government or the regulator alone. Investor
associations, stock exchanges, and companies also play a major
role in making investors more aware of their rights and in helping
investors to make informed investment decisions by educating them
about new instruments and products through seminars, workshops,
and training programs.
I urge all of you
present here: regulator, market intermediaries and investors to
join hands to make our capital market the safest places to invest
in the world.
Thank you.
