Sans chairman, still valid

A committee report that does not have the chairman's signature is an oddity; it is even stranger that the chairman (Percy Mistry, in this case) should resign at the very end of the committee's labours, and over drafting matters rather than on any substantive policy issues""on which the committee seems to have been of one mind. Mr Mistry's late departure is not therefore likely to take away from the committee's work, or raise questions about the roadmap laid down for creating an international financial centre in India (which logically should mean Mumbai). Still, the pre-requisites are daunting in a climate where economic reform has slowed to a crawl. On most ministerial agenda sheets, a core financial sector issue like this one will figure fairly low down on the priority list""especially since little can be done in the remaining term of this government. A goal that is seen as being worthwhile but not very urgent, is likely to make way for issues with greater political resonance""like an expanded mid-day meals programme for schoolchildren. That is not to argue that the goal set out by the finance minister in his Budget speech last year was more in the nature of a wish-list than one with a serious policy agenda backing it. Rather, it is to say that the political class as a whole is unlikely to warm to the idea""and that can only mean slow and hesitant implementation of the action programme.

The reformers will argue that the goal of creating an international finance centre in India can be used as a tool to engineer broader changes in the whole financial sector, their view being that such changes are both logical and beneficial. For instance, there could be more competition in the banking sector, the creation of active bond and derivatives markets, and an opportunity for domestic players in the financial sector to get into the cross-border transactions for which Indian businesses have shown an appetite. Capital account convertibility will have to follow as trade expands, and financial sector regulation too may need to change, with today's system of multiple regulators in isolated silos (banks, stock market, insurance, pensions, etc) giving way to a more holistic regulatory structure. And since none of this needs to be on politicians' radar screen, the finance ministry can work on them without running into a political headwind.

For all that, the potential pay-offs are large. For a start, Indian bankers and associated players will be able to offer the full range of services to their clients""and earn substantial fees, plus create many jobs as the local eco-system expands rapidly to fit needs. Linked to that is the possibility held out by the committee that the rupee could be built into a strong, regional currency. With many Indians in key positions at various global financial firms, there should be no shortage of expertise available virtually on tap. The more contentious issues will come when Mumbai's infrastructure has to be improved. The housing, school and medical care markets will all need to be organised to deliver quality options for an expatriate population. Power cuts of the kind expected to be announced this week will have to be a thing of the past. India has not been excelled in these areas, and is unlikely to be so in the near future. Which is why the actual creation of an international financial centre seems to be some distance away.