When the Prime Minister of India makes whirlwind visit to Mumbai, every event that he attends jostles for importance and media space. The Securities and Exchange Board of India (Sebi) does not need to worry about getting lost in the clutter, but it has a media savvy chairman, which gave the proceedings an interesting twist. Sebi chief M Damodaran, ensured that the 'Five Original Reformers' identified by a pink newspaper graced the dais at the inauguration of Sebi Bhavan on Friday morning. They were Dr Manmohan Singh, Dr Montek Singh Ahluwalia, P Chidambaram, YV Venugopal Reddy and Dr C Rangarajan. The time advantage meant that Sebi's event hogged television channels all day and scored a point. Unfortunately, public memory is not only short but often unfair to those who contributed to initiating economic reforms, with the result that the composition of 'Five Original Reformers' is rather contrived. In fact, barring Singh, Ahluwalia and to an extent Chidambaram, the others may have played a role, but those who contributed more significantly have been unfortunately ignored. So let's set the record right and give credit where it is due.
Posterity must give his due to PV Narasimha Rao, who had the foresight to appoint Manmohan Singh as his Finance Minister and allow him to handle the economic reform process, albeit under threat of a looming default on India's external payment obligations. Chidambaram, as Commerce Minister set the ball rolling on Export-Import policy, again as per specific IMF demands and deadlines; he resigned soon after in 1992. The Reserve Bank of India (RBI) Governor those days was the clever, if sometimes controversial S Venkitaraman. He literally saved India from the brink of a default by touring the world and lobbying for time to get India's economic reforms going. Maybe he gets less than his due because he was not directly chosen by Dr.Singh and had begun salvage operations before the Rao government took over with a much-needed sale of confiscated gold. The capital market itself was dragged on to the reform path of by GV Ramakrishna (GVR), who demonstrated that a regulator, if it so chooses can be pretty ferocious with or without statutory teeth. With strong support from Rao and Singh, GVR steered the passing of the SEBI Act, by skillfully getting the Finance Ministry and Ministry of Company Affairs (MCA) to part with some of their powers. With their support, he also dared to take on powerful and entrenched market intermediaries, forced them to become more accountable and paved the way for market transformation. The securities scam of 1992 aided his clean-up effort. His tenure however ended when he treated the Goldstar case (involving Rao's sons in the securities scam of 1992) with the same transparency and impartiality that ruled his other actions. It is ironical that Sebi forget about him while recollecting its early days.
Debt market push
One person who was all smiles after hearing the Prime Minister at Sebi Bhavan was Nimesh Kampani. As chairman of CII's Capital Market Committee, he has put debt market development at the top of his agenda. With the PM endorsing the need for policy measures to make the debt market "broader, deeper and more liquid", the industry is hoping that after a decade of stagnation, there will be some movement forward, instead of mere committees and promises. It is important to remember that the National Stock Exchange (NSE) opened for business by seeking broker-membership to its debt segment. While the NSE's role in capital market development is justifiably lauded, it failed to make any headway in debt. In fact, debt market brokers lost their business because plans to develop the corporate bond market failed to keep pace with the RBI's negotiated dealing system for government securities which eliminated brokers altogether. In May this year, an internal Sebi committee decided that that the Bombay Stock Exchange (BSE) will be the chosen exchange to create a reporting platform and later a trading platform, including a separate clearing and settlement mechanism for debt. This too has made little headway yet.
When the market watchdog moves to the environment friendly, high security Sebi Bhavan at the elite Bandra-Kurla financial district, its old office will continue to remain a powerful nerve centre. Fittingly, the Forward Markets Commission (FMC) will move into Mittal Court 'B' at Nariman Point. Commodity futures trading in India was re-started after a gap of 40 years, so the FMC still has the status of a relatively junior regulator; but trading volumes are growing at astonishing pace and globally, commodity trading far outstrips the capital markets. Naturally, foreign investors are lobbying hard to be allowed entry into the market, especially since India has emerged as the world's biggest consumer or producer of several key commodities. A bigger and better office for the commodity regulator is long overdue, but as FMC chairman S. Sunderasan says, "well will need a few more years before we can pitch for our own Bhavan."