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Fifteen top names in the financial sector switched off their cellphones and had hectic discussions spread over seven meetings that began at 9 am and ended at 6 pm, reaching 100 per cent unanimity in all recommendations. They represent the minds behind the 'report of the high powered expert committee on making Mumbai an international financial centre'. If the title is a mouthful, the contents of the Percy Mistry committee report are somewhat formidable. For these 15 minds are really dreaming big.
It is one thing to announce the evolution of Mumbai from the financial capital of India into an international financial centre (IFC) amidst table thumping in Parliament as Finance Minister P. Chidambaram did on February 28, 2006. It is quite another to convert that aspiration into reality. You need grey hair, grey matter, a lot of organising power, ability to foresee the practical. But above all, you need to dream. This report lacks none of these and if three words were needed to define the big ideas in this report, they are: scale, reform, competition.
In all there are 48 recommendations, which have been under-reported in the newspapers. These have been divided into three big themes (macroeconomic environment, second generation reforms and, of course, developing the physical infrastructure of the city) and five sub-themes (economic and fiscal strategy, monetary policy, financial regime governance, the missing bonds markets, currency markets, derivatives markets — BCD —- nexus, and weak institutions). The physical transformation of the city, however, is the easier task. Financial governance and managing vested interests who have thrived and continue to thrive on an inefficient, inward looking, almost jingoistic financial infrastructure, are where implementation of this report will face its steepest challenge.
So, there is the general critique of India's financial sector development that shows how the walk from financial repression to financial freedom under which Mumbai can function as an IFC is a path full of devils and ghosts that we, the children of liberalisation, felt had been laid to rest in the tombs of history to be studied, analysed and avoided like the plague. Not so, says the report. Talking to lawmakers, the report notes that if Mumbai has to become an IFC, conflicts of interest that RBI manages and public sector ownership of financial firms through "balance sheet and profit-loss protection as well as high barriers to entry and competition and the resultant suppression of financial innovation" have to end (in other words, amend the Banking Regulation Act).
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