How Manmohan Singh As Finance Minister Shaped Future Of Indian Markets
In order to rescue the nation from a severe financial crisis, a wave of liberalisation was initiated during Dr Manmohan Singh's tenure as FM, which had a significant impact on the Bombay Stock Exchange (BSE), Sensex, and the Indian financial landscape, including the establishment of...Read More
Former Prime Minister (PM) of India Dr Manmohan Singh was the man behind the country’s liberalisation and economic reforms. By introducing robust financial regulations, Singh’s leadership reshaped India’s financial markets, setting the foundation for sustained economic growth and global recognition. Dr Singh was India’s finance minister (FM) from June 1991 to May 1996 under Prime Minister PV Narasimha Rao.
In order to rescue the nation from a severe financial crisis, a wave of liberalisation was initiated during Dr Manmohan Singh’s tenure as FM, which had a significant impact on the Bombay Stock Exchange (BSE), Sensex, and the Indian financial landscape, including the establishment of the Securities and Exchange Board of India (SEBI) and the National Stock Exchange (NSE).
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BSE Sensex 30 figures during FM Manmohan Singh’s tenure
On January 1, 1991, the Sensex benchmark stood at 999 points, reflective of a stagnant economy. By mid-1991, as the government of India introduced bold liberalisation measures, the index began trading around 1,000 points, showcasing early signs of market optimism.
The Sensex saw notable changes after Dr Singh took office in the finance ministry of India in July 1991, reflecting market reactions as the historical data available at Investing.com, one of the top three global financial websites:
July 1, 1991: The Sensex opened at 1,253.08 and reached a high of 1,679.95, registering a remarkable +28.57% growth. This came as the market reacted positively to the announcement of liberal economic policies.
July 1, 1992: A year later, the Sensex opened at 2,972.96 and remained at its highest point of 2,972.96 but saw a decline of -11.47%, primarily attributed to the Harshad Mehta scam that shook investor confidence.
July 1, 1993: The market showed recovery as the Sensex opened at 2,243.81 and touched a high of 2,336.60, reflecting a growth of +4.52%.
July 1, 1994: Opening at 4,098.67, the Sensex reached a high of 4,217.21, with a modest gain of +2.56%.
July 1, 1995: The market opened at 3,217.01, climbing to 3,595.55 with an increase of +4.30%.
May 1, 1996: In the final stretch of Singh’s tenure, the Sensex opened at 3,827.60 and peaked at 3,879.55 but saw a minor decline of -2.66%.
June 1, 1996: The Sensex opened at 3,731.96 and stayed steady at the same level, gaining +2.35%.
Dr Singh opened up the market to both foreign institutional investors (FIIs) and foreign direct investments (FDIs) by positioning India as a major destination for both types of investments.
SEBI transformed as statutory body
In 1992, the Securities and Exchange Board of India (SEBI) became a statutory organisation. On January 30, 1992, the Securities and Exchange Board of India Act, 1992 (15 of 1992) went into effect. In order to promote transparency in the Indian investment market, it was introduced.
Earlier, SEBI was established as a non-statutory body on April 12, 1988.
Establishment of NSE
The National Stock Exchange (NSE) was incorporated on November 27, 1992, during FM Singh’s tenure, marking a major milestone in the history of the Indian investment market. Dr Manmohan Singh attended a historic meeting in May 1992 at the finance ministry, where Ravi Narain, with guidance from RH Patil of IDBI, shaped the NSE’s blueprint.
The proposal sought to create a national, order-driven system that prioritised efficiency, accessibility, and transparency. It was modelled after Sweden’s for-profit exchange model.
The launch of NSE was a visionary proposal for Indian finance.
Since its formation in 1994, the NSE has transformed India’s capital markets. It began operations for the debt segment in June 1994, followed by the equity segment on November 3, 1994 (Diwali day). Its cutting-edge technology and innovative framework signalled a new era of financial market efficiency and trust.
The Sensex’s performance during Dr Manmohan Singh’s tenure as finance minister demonstrates the profound impact of economic reforms. Since 1991, his contributions to the country’s investment market have helped investors build great wealth. His legacy as a finance leader continues to have an impact on India’s financial systems.
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