Lok Sabha

December 11, 2019

Saugata Ray speaks on the International Financial Services Centres Authority Bill, 2019

Saugata Ray speaks on the International Financial Services Centres Authority Bill, 2019

Full Transcript

Madam, I shall be brief. The rest of the time will be given to Mahua Moitra from our party. 

There is nothing to oppose in the International Financial Services Centres Authority Bill, 2019. The only thing is this Bill is overdue. In 2015, the ex-Finance Minister Late Arun Jaitley announced the setting up of a GIFT (Gujarat International Finance Tec) City in Gujarat. In February, 2019 the government brought a Bill in Rajya Sabha. It has taken four years after Arun Jaitley’s announcement, may his soul rest in peace, to even bring this Bill to this House. 

Karti Chidambaram spoke very well. He said this Bill is entirely for one GIFT city because there are no other international financial centres in India at present. Now you may know Madam, that an expert panel headed by former World Bank economist Percy Mistry, submitted a report on making Mumbai an international financial centre in 2007. Mumbai and the Bandra-Kurla complex would have been ideal for setting up an international financial institution. The decision to set up this in Gujarat was entirely a political decision. I wish the Finance Minister success in her effort. She is going through a bad time since the economy is, with the rate of growth at 4.5 per cent, unemployment 8.5 per cent, inflation making a comeback, she is in difficulty. So it would be good if she can revive a part of the economy through this Bill. The problem is, GIFT City, the dream project of the Prime Minister who is from Gujarat, and maybe the Home Minister who is also from Gujarat, is in dire trouble. You may know that this city’s future hangs in balance because new board of IL&FS is a non-banking financial company which collapsed. Admitted that many of the IL&FS group companies involved in the project including the joint venture partner holding company IL&FS, will not be able to pay off their debt to their financial creditors. So the basic financial infrastructure of GIFT City is collapsing.

GIFT City was a fifty-fifty joint venture between IL&FS and state government owned Gujarat Urban Development Company. So maybe the Finance Minister would assure the House, that the GIFT City finances will not collapse.

There have been a problem about one of the primary objectives behind setting up GIFT City. It was to bring offshore trades based on Indian stocks and currencies to trading platforms in the Indian IF&SC. The centre has been very worried about migration of volumes in NIFTY Futures to the Singapore stock exchange. They currently account for 30 to 40 per cent of the daily turnover in NIFTY Futures.

Ma’am, the sad thing is that we are a country of 130 crores. Our Prime Minister talks of making it a five trillion dollar economy. But small, puny little places, like Singapore, where Mrs Sule lived for a long time, have become International Trading Hubs. London, New York were there, and now Dubai and Shanghai are coming out and in 70 years of independence, we have not been able to make a trading hub in this country.

I want the Finance Minister to plug all the loopholes at present in GIFT City, the question of setting up another International Financial IFSC services centre is far fetched. We take a decision, then we take 10 years to set up an IFSC. Now our hope rests on the Gujarat GIFT City. But it is unfortunate that we have to build the Bill for the purpose. I was going through the details of the Bill. The new authority will be set up, it will have a Chairman, two wholetime members and it will do away with all the regulators – SEBI, RBI, IRDA and Pension Fund Regulatory Authority under one roof. That should be done in any case. It will help in rational sustaining of local economy and it will do fundraising services, asset management, wealth management, global trade management, global and regional treasury management, risk management operations, merger and acquisitions. 

All these are essential services and for that it needs a strategic location and a good quality of life. If you want to bring the best, see what Singapore did, bring the best brains of the financial world to Gujarat here to create an environment. So while I support the Finance Minister in her effort to create International Financial Services Center in India which starts in Gandhinagar on the bank of Sabarmati, Gujarat, and to continue it in other places in the country, I think the future of this city does not look bright. So I shall request the Finance Minister to remove the clouds of doubt and suspicion and create an environment for International Financial Services Centre to set up anywhere in India.