Transformation and Regulation of the Indian Stock Market (With Insights from the P.J. Thomas Report of 1948)

The Government of India set up a departmental enquiry headed by Dr. P J Thomas, Economic Adviser to the Ministry of Finance. The Committee was constituted to submit a report on a suitable law to regulate the stock exchanges in India as speculative activities during and after World War II were increasing in spite of the promulgation of the Defence of India Rules, which was also about to lapse. Dr. Thomas’s report of 1948 aimed to bring about comprehensive reorganization, establishing a regulatory environment to safeguard against unhealthy speculation and manipulative practices. To accomplish these, the Committee recommended the promulgation of central legislation and the setting up of a competent public authority to administer the law. Based on the recommendation of this committee, a draft bill on stock exchange regulation was prepared by the government in 1951, which was then referred to an expert committee under the chairmanship of Mr. A.D. Gorwala. Subsequently, on the recommendations of the Gorwala committee, the Securities Contracts (Regulation) Bill, 1954, was formulated, which led to the promulgation of the Securities Contract Regulation Act (SCRA) of 1956.

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