All financial market regulations should be brought under the Securities and Exchange Board of India, the Economic Survey said on Thursday.
"Bring all financial market regulations under Sebi with a view to (encouraging) integrated development," the survey said, while listing the potential policy decisions for the government in the financial market arena.
At the same time, the survey also suggested broadening the long-term debt markets by liberalising the investment norms for insurance and pension funds and said that the government could consider a guarantee mechanism for credit enhancement of long-term infrastructure debt.
According to the Survey, the global financial crisis adversely impacted the Indian capital market during 2008.
"Having regard to these trends, the regulatory measures initiated during the year were aimed at ensuring the soundness and stability of the Indian capital market," said the survey.
"The global crisis also meant that the economy experienced extreme volatility in terms of fluctuations in stock market prices, exchange rates and inflation level during a short duration necessitating reversal of policy to deal with emergent situations," the survey noted.
The effect (of global crisis) on the Indian economy was not significant in the beginning. The initial effect of the subprime crisis was positive as the country received accelerated FII flows from September 2007 to January 2008.
However, the crisis soon spread and the net portfolio flows to India turned negative as FIIs sold their shares in a bid to replenish overseas cash balances, the Survey added.
"Policy initiatives in the capital market included guidelines to ensure that funds are debited from investors accounts only upon confirmed allotment of securities, reduction of timelines for rights issues, ...
"... expansion for eligibility criteria for listed companies that are willing to make qualified institutional placement route and a simplified listing agreement for debt securities among others."
The year 2008 began on a bullish note and saw the Indian capital market touching historical highs on January 8, when the Bombay Stock Exchange benchmark, Sensex, touched 20,873 and National Stock Exchange bellwether index Nifty witnessed 6,288 level.
But the rally in the market got adversely affected after the impact of the global financial crisis, much in tandem with the international financial markets.
The capital raised through equity issues during 2008 mounted to Rs 49,485 crore (Rs 494.85 billion), a dip of 15.7 per cent from the 007 level and in the case of the secondary market the BSE Sensex and NIfty indices declined by more than 50 per cent.