Peerless policymaker who shaped equity markets

Seeds for robust equity markets were sown during his tenure as FM in Narasimha Rao government. Economic growth gathered momentum in Singh's first term as PM

- SUNDAR SETHURAMAN

The market's performance under the first term of Manmohan Singh, from 2004-2009, was the second best under any prime minister: The benchmark Sensex rose 180 per cent and the Nifty 172 per cent. The gains were a shade better during P V Narasimha Rao's premiership, when Sensex gained 181 per cent, and Nifty rose 171.4 per cent. Manmohan Singh was the finance minister then and oversaw economic reforms, which rescued India from one of its worst fiscal and balance of payment crises and put the economy back on track.

Measures that eventually enabled robust equity markets were also introduced during that period. During Singh's tenure as finance minister, the market regulator, the Securities and Exchange Board of India (Sebi), was given statutory powers. The office of the Controller of Capital Issues was dissolved. The power to decide and clear the public issue of shares was transferred from the finance ministry to Sebi.

Open markets

The private sector was allowed to enter the mutual fund industry and foreign portfolio investors (FPIs) to invest in Indian equities. As of September 2024, mutual funds own 9.5 per cent of the total market capitalization of companies traded in NSE, and FPIs own 17.5 per cent. As of November 2024, 51.8 million Indians are investors in mutual funds. Formal research on equities started after FPIs entered Indian markets. "The entry of FPIs professionalized Indian markets," said Devina Mehra, chairperson and managing director of portfolio management services firm First Global. "Before that, there was no securities research. No firm had an investor relations department."