Indian capital market reforms in the post liberalisation era

Much has happened in the Indian capital market in the last two decades. With its foundations laid in socialist based economy of four decades, with strict government control over private sector participation, foreign trade and foreign direct investment, India opened its gates to the outside world in the early 1990s. Since then its economy and financial markets underwent radical changes. Indian Capital Markets have shown tremendous growth in the post Liberalization era. Raising capital is a strategic priority across India and role of Capital Markets has assumed far greater importance and urgency. The growth in the economy was duly supplemented by a significant increase in the capital markets activity. There were significant changes to the legal framework, with Securities Exchange Board of India (SEBI) being entrusted with the regulatory power to govern the capital markets to ensure compliance. This paper identifies the role of capital market and the major reforms undertaken in the capital market of India in the post liberalized era. It also discusses the various policy measures formed by SEBI for the development and regulation of the capital markets.