Dubai sinks, and Mumbai misses the boat

Talk Of Making City An International Centre Appears To Have Lost Momentum, Post-Global Financial Meltdown IT'S one more opportunity lost for Mumbai. The Centre and the Maharashtra government — which not so long ago had floated the idea of making Mumbai an international finance centre (IFC) — appear oblivious to the developments in Dubai. The state has hardly any plan to market Mumbai even as Dubai is losing its lustre.      A couple of years back, the Centre and the state government had an ambitious plan to make the financial capital an IFC. The idea received a fillip in April 2007 after a special committee, headed by Oxfordbased development consultant Percy Mistry made a strong pitch to elevate Mumbai's status. The state government, then led by Vilasrao Deshmukh, promised to take every possible step to bring Mumbai up to global standards.      Prime Minister Manmohan Singh, who first proposed the idea of making Mumbai another Shanghai before the 2004 elections, too took interest in helping the city grow. In August 2007, Mr Singh had even convened a high-level meeting in this regard and advised key government functionaries and regulators to assess the impact on the financial sector and other areas if the Mistry committee report was implemented. In a meeting attended by the then finance minister P Chidambaram, Planning Commission deputy chairman Montek Singh Ahluwalia and the chiefs of Reserve Bank of India, Sebi and the insurance regulatory authority, the prime minister also asked them to initiate action in this regard.      All this momentum, however, seems to have been lost in transit. "No one is talking about this now," a minister in the Manmohan Singh Cabinet said, in the context of the Dubai developments. "I'm not authorised to talk on this since there are a number of issues involved including political ones," he said, but added it was not before the government "at the moment".      There was more silence at state headquarters Mantralaya. After getting a second chance to rule, chief minister Ashok Chavan is struggling to find his feet and is busy tackling more pressing issues. "We are trying to see how can we make the best of the Dubai crisis. There are certain things under way which I would not like to comment upon as of now," Mr Chavan told ET. "There is definitely a concerted effort being made at the state's level to market Mumbai at this juncture," Mr Chavan said, without giving the details.      But top officials from the state administration are not exactly convinced. "On the ground, not a single proposal or initiative is being pushed to strengthen Mumbai," a highly-placed state functionary told ET. He pointed out a slew of measures the Mistry committee had cited as prerequisites before Mumbai could reach international status.      "The Centre had promised that the finance ministry and the Planning Commission would examine how they could extend support to the Maharashtra government and the Brihanmumbai Municipal Corporation to strengthen the city's decrepit infrastructure. We are waiting for the Centre's suggestions," this official said. Besides the Central initiatives, a lot needs to be done at the state level. " The biggest challenge is improving the city's infrastructure. There is not much to show on this front as well," the official said.      Experts have mixed views about Mumbai's potential to emerge as a credible IFC. "India does have a place in the game of international financial centres today, but this story will play out over five to 10 years," says Ajay Shah, professor at NIPFP. "Just because Dubai has collapsed, you can't expect India's emergence as an IFC over the next few days or months. To get there, what India needs is deep reforms of financial and monetary policies, and a lot of that policy agenda faces hostility from the present establishment," he says.      "The recent global economic crisis has taught one important lesson: you can't have city states as IFCs. A crisis of the magnitude seen recently will only happen once in 40 years. But when it happens, you need the fiscal capability of a big economy. This works against city states like Dubai or Singapore, and works in India's favour. If I were to bet on the major IFCs in the next 25 years, they would be London, New York, Mumbai and Shanghai," says Mr Shah.