PM Modi’s budget (2015) to make India global financial hub (Salient features)
-Dr. Abdul Ruff Colachal
Indian PM Modi seems to be committed not to make common people happy by providing the essentials to the needy and less fortunate ones in a democracy but to make India a global financial hub as top priority and his 2015 budget is supposed to achieve that.
Indian rulers have been talking for years about mega-reforms that would reshape the contours of India as it becomes the world’s fastest-growing modern economy.
India is viewed as super power of South Asia but Indian government has never been quite sure or confident about its economic and financial position. Indian corporates want to expand their business across the globe, making more and more extra profits.
Indian regime while promoting crony capitalists in the country do show any interest to see the tricking effect reaches the common people also. Here India failed baldy. But none complains about the fate of the poor as even communists are busy counting their own profits.
Neither the Congress and BJP nor other regional big parties can be expected to pursue the interests of common people who form the majority of their voters. However, the matter can be left at that. The Aam Aadmi came to fill the gap, caring for the poor and common people in real terms.
Indian PM Modi’s finance minister Arun Jaitley’s budget for 2015 begins from the premises that a properly functioning capital market requires proper consumer protection. Jaitley, therefore, proposes to create a task force to establish a sector-neutral Financial Redressal Agency (FRA) that will address grievances against all financial service providers.
Perhaps, gone are the days of running from one regulator to another as firms, wearing the garb of universal banking, wreaked havoc on the savings of Indians.
Every Consumer seeks is a return on investment at a low cost and transparent architecture. Consumers would experience the push towards an insurance product when they go to invest in the Public Provident Fund or a mutual fund but an environment of institutionalised mis-selling puzzles and annoys them. . Under the FRA, they will have a single complaint management agency to go to. The FRA will setup a nationwide machinery to become a one-stop shop where, the Financial Sector Legislative Reforms Commission (FSLRC) report states, consumers can carry complaints against all financial firms.
Arun Jaitley moots the creation of Indian Financial Code (IFC). In effect, the IFC disrupts existing regulatory structures and recreates a more cohesive, more accountable financial architecture that oversees nine important moving parts – consumer protection, micro-prudential regulation, resolution, capital controls, systemic risks, development and redistribution, monetary policy, public debt management, and contracts, trading and market abuse. The finance minister informed the Parliament that work assigned to the task forces on the Financial Data Management Centre, the Financial Sector Appellate Tribunal, the Resolution Corporation, and the Public Debt Management Agency are progressing satisfactorily.
The IFC is one law that alone is a giant reform. By placing the consumer at its core, the IFC completely changes the contours of India’s financial sector that so far has been held hostage to companies that thrive on anomalies and regulators too busy playing turf-wars than focusing on customer services and protection. The IFC is an extremely bold law to enact: all told it will replace 61 existing laws.
The NDA government will need all its political skills and then some to convert this idea into a living reform.
Although the need for an international financial centre had been felt for a long time, ever since India opened up in 1991 and Indian companies began to expand their footprint globally, this is an idea that has taken all of eight years to turn into reality.
Jaitley said India produces some of the finest financial minds, including in international finance, but they have few avenues in India to fully exhibit and exploit their strength to the country’s advantage.
The Modi government is eager to implement the GIFT (Gujarat International Finance Tec-City) in Gujarat, envisaged as International Finance Centre that would actually become as good an International Finance Centre as Singapore or Dubai, which, incidentally, are largely manned by Indians, but GIFT has taken root in Gujarat. GIFT is a globally-benchmarked international financial centre that will target 8-10 percent of financial services on 84 million sq ft of space and create one million new jobs – 30,000 by 2016 from 700 today. Its core operations will include offshore banking; insurance, assurance and reinsurance; regional financial exchanges and back offices.
Since an international financial centre, of the likes of London, Singapore or Dubai, can’t just live on money, GIFT is being created as a smart city with schools, hospitals, clubs, entertainment centres and so on to attract top talent from across the world. The urban infrastructure being planned is world class.
India’s international financial centre will occupy the time zone that’s currently lying vacant, between Singapore to the East and Dubai to the West. If it rises to the occasion, it will be able to pull back a lot of markets that India has lost. Much depends on execution, some of which has begun. Phase 1, for instance, is in an advanced stage of completion, and institutions such as World Trade Centres, State Bank of India and a Bombay Stock Exchange tower have already committed to it.
While the IFC rebuilds the domestic financial architecture, GIFT becomes a hub for international finance. These are also in tune with the larger objectives of Make in India, an endeavor that will need finance in order to gather momentum.
From Gujarat PM Modi moved to Indian capital to pursue his GIFT idea. The multinational corporates are either using him or assisting him to achieve the objective.