Finance Minister P Chidambaram is convinced that the high-powered expert committee report on making Mumbai an international financial centre is visionary and leaves little room for debate. But only for those who wish to make Mumbai a financial centre. “And how many of us really wish to make Mumbai a financial centre,” is the rejoinder Finance Minister added to the earlier statement.
Probably it is the task of convincing the constituency that questions 9 to 10 per cent growth makes Chidambaram sceptical about implementation of the report. “The report is not for the weak, the faint hearted, status quoits, inward looking,” the minister said. The entire report is only metaphor for deregulation, liberalisation and globalisation, remarked, Chidambaram in Mumbai while addressing a national conference organised by CII on Mumbai as an IFC.
Finance Minister stayed away from one of the main suggestions of the report, capital account convertibility within 18-22 months. However, he did mention some of the reforms already set in motion in the insurance, pension and public debt management segments. Having separated the debt office from the RBI to be a wing of finance ministry, the need to separate regulation of banks from RBI is necessary. But it is a legacy issue and there is need to amend the laws to make that happen. “One has to cautiously separate the functions,” Chidambaram said. The report suggests that Central Bank must have only one mandate and that is targeting inflation, he said.
If financial deregulation to create an IFC is a difficult task, giving Mumbai city the kind of infrastructure it needs seems to be even more onerous. Having drawn violent reaction to his remarks demanding autonomy for governance of Mumbai, the Finance Minister again reiterated for large degree of autonomy for Mumbai. “It should become a city where people can ‘work, live and play’,” the minister said.
The HPEC, headed by Percy Mistry made a strong case for establishing an international financial centre in Mumbai on the lines of NewYork and London in two phases. India is much integrated with the world economy and needs substantial international financial services said the report, emphasising the need for an IFC. “This is Mumbai’s moment,” said Brooks Entwistle, MD & CEO, Goldman Sachs (India). This is the opportunity to become the Hongkong of 90s and Shanghai of 2000 and if Mumbai loses the chance there are several others markets vying for it Entwistle warned.