‘To become an IFC, Mumbai first needs to be a global city’

He lamented that the reforms process has hardly moved forward. “The best way for India and Mumbai is openness and full liberalisation. But India is now run by a command and control regime. The people in power don’t want to give up this command and control. The reforms and various proposals suggested by the panel are getting stuck in the process,” he noted.

Mumbai has been unable to make any move forward despite big talks and tall claims about improving urban infrastructure and making it an international financial centre (IFC), he observed. “I’m disappointed by the way slow pace at which Mumbai is transforming. You can’t convert it into an international financial centre or a global city in this manner,” he said.

“If Mumbai has to become an IFC, it has to become a global city like London, New York or Singapore. But nothing has been done in the last one year — on the financial, governance and infrastructure fronts,” said the former World Bank economist, who later became a high-profile investment banker in financial hot-spots. “The slow progress is hurting the interests of every Indian citizen. There may be political compulsions but the country as a whole is getting hurt in the process.”

Last April the Mistry Committee proposed several reforms in the financial sector, but there has been hardly any action on any of those suggestions. On the contrary, there were reversals in the reform process, eg, the curbs on capital flows. The committee had mooted full convertibility of the rupee on capital account by the end of 2008 or March 2009. “There’s no progress on this front. This is considerable policy confusion and heated intellectual disagreement over convertibility. Why should there be control on capital flows?” Mistry asked.

Similarly, there’s been no progress on proposals like divesting the government holding in public sector banks, a new legal system for financial services, developing the bond-currency-derivative market and turning the Reserve Bank of India into a monetary authority. The committee clearly said that the RBI should phase out its regulatory role. There’s no action on these proposals or the suggestion for an omnibus Financial Services Modernisation Act.

“The government should focus only on governance. It should sell its holding in public sector companies and banks. It has no business to be in business and control or own companies.”

Simultaneously, Mistry also mooted a separate governance structure for Mumbai city. “Now there are multiple agencies with hardly any coordination. We need a strong governance structure on the lines of New York, London or Hong Kong. Till this is established, a committee of the Mayor, a special secretary of the state government and a joint secretary from the Union government should coordinate the work and run the affairs,” he opined.

Mistry was critical of the diffused responsibility of the state government machinery in making Mumbai a global city. “Ministers are elected from various regions of the state. It is natural that they will be focused on those regions,” Mistry said.

“In short, to become an IFC, Mumbai needs to be a global city.”