Thus, cities that succeed in encouraging human interaction and lifestyle will also succeed in creating the cluster of human capital necessary for being a successful financial hub. Note how London remains the world’s shipping hub although it is no longer a port. This is because so much of the legal contracts, finance, insurance are arranged in this city. In the same way, its success as the world’s financial hub has little to do with the success or failure of the London Stock Exchange. London’s success is far more related to its ability to attract talent (the richest Indians, Russians, Arabs all have their homes in London). This in turn derives from its charm as a cosmopolitan place to live. In short, London’s success is more due its restaurants, theatres, the nearby universities of Oxford/Cambridge, the historic buildings, the museums and so on.

So, what does this mean for

Mumbai?

First, it must be an attractive place to live for the talented. No amount of tinkering with financial regulations can compensate for the lack of schools, quality housing, public transportation, parks, museums/art galleries and so on. If these issues are not tackled, it is entirely possible that we get a vibrant stock-market but none of the gains from having a major international financial hub — financial players can quite easily live in Singapore/ Dubai and trade in Indian markets.

Second, every effort must be made to ensure that the city’s human capital does not de-cluster. Rent-control and road congestion in South Mumbai has steadily forced the economically active population to scatter. Thus, there has been a de-clustering of business activity to secondary hubs like Bandra-Kurla. Some de-clustering is acceptable and even necessary but it must be recognised that this process reduces the intense human interaction that defines southern Manhattan and London’s City. In short, too much de-clustering would simply miss the point of being a hub.

... contd.