"We should all make concerted efforts to motivate savers to put their money into shares and bonds so that the economy benefits through a vigorous and dynamic capital market," Vajpayee said.
"Most of the household savings were going to less productive non-financial assets and banking sectors. A high rate of domestic savings, channelled into productive investments are important to achieve the 8 per cent growth in gross domestic product," he said.
"Indian industry needs large capital to attain this growth rate. For that, we need to encourage present savers to save more and also bring in more savers," he said while inaugurating the campaign of Securities and Exchange Board of India.
Concerned at scams and poor standards of corporate governance, Vajpayee said: "While the technology and the regulatory frameworks of the capital markets have improved, I am pained to say that standards of corporate governance have not kept pace."
Noting that market scams brought a bad name to Indian business community and that Unit Trust of India fiasco has caused heartburn to millions of small investors, Vajpayee said every care has been taken to protect interest of small investors in its revamping.
"We need markets that are known for safety and integrity. We need knowledgeable investors. We need to build a sustainable, high-growth economy which will ensure better living conditions for our people, now and in the future," he said, urging regulators and market intermediaries to join hands in this effort.
The fact that very few companies have tapped the primary market in recent years is certainly a cause for worry, Vajpayee said, regretting that there are many companies that often use ‘questionable and even illegal means' to achieve their ends.
"We have come across far too many instances of companies that have raised money from the market by creating hype and then defrauding their investors," he said, adding many of them issued shares at a hefty premium, most of their scrips are now trading well below their face value.
"This is how boom became bust and hopes turned to dust for many gullible investors. This is how the investor community lost confidence in the market leading to prolonged stagnation. This is how investible savings turned to non-financial assets or safe bank deposits," he said.
Meanwhile, Finance Minister Jaswant Singh said strengthening of the Sebi and enhancing penalty limits through amendments in the Sebi Act would deter evaders and improve confidence of investors in the capital market, which has been a major contributor to the growth in economy.