The expert committee on making Mumbai an international financial centre, chaired by former World Bank economist Percy S Mistry, has offered a package of radical recommendations ranging from full rupee float by 2008 to the abolition of the securities transaction tax and doing away with restrictions on foreign investment in sovereign bonds. | |
| The 15-member committee, which was set up following a Budget announcement by Finance Minister P Chidambaram, has also recommended the imposition of a goods and service tax on financial services, and creation of a currency spot market and rupee-settled exchange traded currency derivatives market. |
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| The call for full convertibility by next year takes forward the second committee report by former Reserve Bank deputy governor S S Tarapore, which recommends a five-year timeframe. |
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| "Having considered the recommendations of the Tarapore-2 Committee report carefully, the expert committee nevertheless recommends that full capital convertibility should be achieved within a time-bound period of the next 18-24 months and by no later than the end of calendar 2008," the report said. |
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| The committee's report was preceded by some controversy after Mistry resigned on February 7 following differences with the committee over describing government-owned banks as "zombie banks," a term used for banks that are dependent on government hand-outs. |
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| Other members included ICICI Bank Chief Executive KV Kamath and UTI Bank Chairman PJ Nayak. |
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| The report has said that moving towards export of financial services from India is synonymous with developing Mumbai as a financial hub, making it vital to remove domestic entry barriers, trade barriers and barriers to FDI. |
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| The report envisions a first phase, from 2007-2012, when Mumbai will connect India's financial system to the world's financial markets. |
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| In the second phase, from 2012-2020, the megapolis would develop the capacity to join London, New York and Singapore as one of the top global financial hubs. |
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| Seeking radical improvement in infrastructure, the report has said that Mumbai needs to become a first-world city that can attract the world's brightest minds by being an "attractive place to live, work and play". |
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| WHAT PANEL WANTS |
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| Abolition of securities transaction tax, stamp duties Pruning of public debt No restriction on foreign investment in sovereign bonds Imposition of Goods and Service Tax on financial services Creation of a currency spot market and rupee-settled exchange traded currency derivatives market. A new unified financial services modernisation Act Removing domestic entry barriers, trade barriers and barriers to FDI |
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