Many financial sector reforms suggested by the Percy Mistry Committee on making Mumbai an international financial centre may not figure in Budget 2008-09. |
Finance ministry officials say the implementation of the recommendations of the report will be carried out only after the Budget. KEY RECOMMENDATIONS
Full capital account convertibility by 2008-end
Eliminate securities transaction tax by 2007 and stamp duties by 2008
Open up purchase of rupee-denominated debt instruments issued by the government to all buyers
Focus monetary authority exclusively on single task of managing key short-term 'base rate' by 2009-10
Set up independent public debt management office by 2009
Shift financial regulatory regime from rules-based regulation to principles-based regulation by 2011
Permit unrestricted entry of well-known global accounting firms operating in IFCs/GFCs by 2008
Transfer all regulation/supervision of any type of organised financial trading to Sebi by 2008 | The Mistry Committee has recommended full capital account convertibility by 2008-end, abolition of the securities transaction tax and stamp duties, pruning of public debt and doing away with restrictions on foreign investment in sovereign bonds. |
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It has also proposed imposition of goods and service tax on financial services, creation of a currency spot market and rupee-settled exchange traded currency derivatives market. The Reserve Bank of India (RBI) is currently working on a mechanism to develop a rupee futures market in the country. |
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As a part of the consensus building process on the recommendations, the finance ministry had sought comments on the Mistry report from various ministries like commerce and urban development, and financial-sector institutions like the Securities and Exchange Board of India (Sebi), Insurance Regulatory and Development Authority (IRDA) as well as the RBI. |
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Stakeholders like the RBI have favoured a cautious and gradual approach to financial sector reforms rather than a big-bang approach, as advocated by the Mistry Committee report. |
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In its detailed chapter-wise response on the Mistry report, submitted to the finance ministry, the central bank has expressed reservations over setting a deadline for undertaking financial sector reforms as suggested by the Committee. |
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The 15-member High Powered Expert Committee (HPEC) on making Mumbai an International Financial Centre was set up following an announcement in the Budget 2005-06. |
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The panel submitted its report to the finance ministry in April last year, though the chairman of the committee, Percy Mistry, resigned before the report's com-pletion. |
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