Battle’s Brewing Over Int’l Finance Centre
Sugata Ghosh & Krishna Thevar
Mumbai: The race and lure to set up India’s international finance centre is fast turning out to be a tale of two cities – Ahmedabad and Mumbai – and subtle politics playing out around the two western business hubs.
At a recent meeting with finance and commerce ministry officials, managers of Gujarat International Finance Tec-City (Gift) – the special economic zone near Ahmedabad – said it would be against global best practices to have a second offshore financial centre in a country with partly-convertible currency, a person familiar with the discussions told ET.
The concerns voiced by Gift come at a time the Maharashtra government is trying to cobble together a plan with senior bankers to carve out a slice of Mumbai, India’s financial capital, as a global financial services centre that would over the years compete with Dubai and Singapore.
Gift authorities fear that two finance centres would not only be unviable, but could also confuse investors. “Besides, the worry is if Maharashtra is given permission, it would be difficult to refuse other states. Even if the law allows, multiple centres could be a supervisory
the first state to make a serious effort to set up a global services and finance district – having applied in 2010 and received the central approval a year later
has recently stepped up efforts to set up a global financial services centre in Mumbai.
MUMBAI HAS the legacy, being the financial capital of the country. challenge for regulators like RBI and Sebi,” said a government official who attended the meeting where officials of the state-controlled Mumbai Metropolitan Regional Development Authority were also present.
During its four-month journey, monsoon delivers 75% of the country’s annual rain, irrigates parched fields and replenishes depleted reservoirs for hydropower generation apart from feeding canals. A good monsoon will also help keep prices in check and encourage the Reserve Bank of India to maintain its accommodative monetary policy stance. The expected heavy rainfall will end the water shortage in many parts of the country, particularly Maharashtra and parts of southern India, where reservoirs have hardly any water left, although it will take a few months to ease the situation. IMD Director-General LS Rathore said drought-hit parts of Maharashtra will receive good rainfall.
Heavy showers will also boost demand for scooters, motorcycles, small cars, ice-creams, consumer goods, tractors and farm equipment, which has been hit by frequent monsoon failure in recent years. Rathore said the years ahead would be better. “Subsequent to this year, there will be more number of normal (monsoon) years,” he said.
IMD said there is a 94% chance that the monsoon will be normal or surplus. Rathore said the probability of excess rainfall was 30%, which will help fill up reservoirs faster, although this also raises fears of floods. Details on the onset of the monsoon, traditionally in the first week of June, will be provided in the next forecast in the third week of May, after which the Met department will update its outlook. growth should come back on track and we should target to touch the 2013-14 foodgrain production figure of 263 million tonnes from the 252 million tonnes we are targetting in 2015-16,” he said. Amul Managing Director RS Sodhi was optimistic. “This summer season we expect 25% growth in ice-cream sales over the previous year, which was around Rs 1,000 crore,” he said.
The pulses crop is likely to benefit the most from a good monsoon, said Prerana Desai, vice-president, Edelweiss Agri Research. “Grain, cotton and oilseeds have not given attractive returns to farmers in the last season, so we expect planting of pulses to see an increase,” she said.
The forecast will boost industry sentiment as revival of rural demand leads to a turn in the investment cycle, said Confederation of Indian Industry (CII) Director-General Chandrajit Banerjee. “This would take the economy to a higher trajectory of around 8% growth,” he said, adding that a good monsoon will help bolster farm productivity and alleviate rural distress besides lifting rural incomes and consumption demand even while augmenting food supplies and keeping inflation in check. LD Mittal, chairman of the Sonalika Group, said the economy would pick up and so would sales of tractors. “Compared with the previous two years, when tractor and farm equipment sales slowed down, we should now see the sector picking up,” he said.
LID ON INFLATION
“The prospects of normal monsoon along with subdued global commodity prices would keep retail inflation within the 5% mark, which in turn should help RBI to retain the dovish stance towards monetary policy and open up the door for further easing of policy rates during the current year,” said CII’s Banerjee. Last year, the monsoon was14% below normal while in 2014 it was 12% in deficit. The distribution of rainfall was also erratic as the desert region of Rajasthan had abnormally high rainfall while agriculturally important regions had a bigger deficit than what is reflected in the overall data.
Agriculture accounts for 17% of India’s economy and more than half the country’s population depends on farms directly or indirectly. Agricultural growth can touch 6% in 2016-17 if the country receives normal monsoon rains this year, Niti Aayog member Ramesh Chand has said. He had said that higher growth was recorded after the drought years of 2003-04 and 2010-11. Chand said agriculture growth in 2015-16 is expected to be 1.2%. In 2014-15, it stood at -0.25%. “The growth will be over (that in) 2013-14. It happens in agriculture that growth sometimes fall to -0.5%, and sometimes touches 15% growth rate,” he said.
La Nina in Spanish means ‘the girl’ and it is caused by an abnormal cooling of ocean temperatures in the Pacific region.