Mumbai as an international financial centre

Three fascinating new takes on Mumbai as an international financial centre:

• Mukul Asher and Azad Singh Bali in DNA a few weeks ago.


• In the February 2010 issue of Pragati released yesterday, there are two articles on this: by Percy Mistry himself, and by V. Anantha Nageswaran.

A while ago, I had a blog post - http://tinyurl.com/mistry - which collected together the MIFC report and the immense outpouring of responses to it at the time.



How do I think we are faring? Pretty much as expected:

• India has not yet moved towards a deeper rewriting of the core financial laws, and redefinition of the role and function of government agencies in finance. But there is an increasing acceptance that this task is high on the TODO list of policy-makers, after the Patil, Mistry, Rajan and Aziz reports.


• Some incremental change has come about, such as currency futures. SEBI is making good progress on strengthening the capital markets which will be the foundation of India's play in the world of international financial services.


• Bombay is making a little progress (or maybe not ). See my recent blog post: Two paths to good cities.


• Participation in IFS production through BPO is continuing to grow rapidly. There is real capability building up in the labour market.


• India's de facto integration into the world economy took a knock in the crisis. The gross flows in and out of the country (across capital and current accounts) achieved a peak value of $211 billion in the September 2008 quarter.
  From that peak, there was a drop to $152 billion in the March 2009 quarter - this took India back to a value similar to that seen in September 2007.
  From that bottom, growth has begun again, and in the latest data (September 2009) this number is back up to $175 billion (which is bigger than the value seen in the December 2007 quarter but not yet the March 2007 quarter).


• In the crisis, we have better understood that small countries like Iceland find it difficult to be a big international financial centre given the lack of a commensurate fiscal backstop. This improves India's competitive positioning when compared with Singapore, Dubai or Qatar.