IFSC body in Gujarat will globally discredit Mumbai: Pawar to Modi

The Centre's decision to station the International Financial Services Centre (IFSC) Authority at Gandhinagar in Gujarat will not only cause financial damage to the country, but also bring "international discredit" by undermining the importance of Mumbai, Nationalist Congress Party President Sharad Pawar warned here on Sunday.

In a letter to Prime Minister Narendra Modi on Saturday - released on Sunday - Pawar said the Centre's move would be taken as an act of undermining the strategic importance of Mumbai that boasts as the nation's financial capital and even the financial institutions worldwide will be "taken aback" by this shocking decision.

He pointed out that in the general psyche of the business community, bankers and other financial institutions, Mumbai is their natural choice for setting up such a unified authority, and fervently urged the PM to reconsider the decision.

Citing Reserve Bank of India (RBI)'s latest statistical data as at April 23 (2020), Pawar said that the Indian banking sector has deposits worth Rs 145,00,000 crores.

"The share of Maharashtra alone in the deposits is 22.8 per cent, followed by Delhi (10 per cent), Uttar Pradesh (7.8 per cent), Karnataka (7.2 per cent) and Gujarat (5.4 per cent). As per the reserve requirement, every bank has to maintain SLR at the rate of 18 per cent of its deposits in the form of government-securities (G-Sec). Though this G-Sec, the Central Government receives funds to the tune of Rs 26,00,000 crores," Pawar said.

Out of these funds, Rs 5,95,000 is received from Maharashtra alone against Gujarat's contribution of Rs 1,40,000 crore, the NCP chief added.

"In spite of Maharashtra's immense contribution to G-Sec, the decision of establishing the IFSC (Authority) in Gujarat is egregious, erroneous and unwarranted. It will be perceived as a move to shift financial institutions and business houses away from Maharashtra and will create unnecessary political disturbances," cautioned Pawar, Besides, the NCP leader said that Mumbai is already recognized as the world's Top 10 centres of commerce in terms of global financial flow generating 6.16 per cent of India's GDP and accounting for 25 per cent of industrial output and 70 per cent of capital transactions to Indian economy.

The city already houses major financial institutions and corporate headquarters of numerous companies and its business opportunities attract many global MNCs.

Since the IFSC Authority is a unified agency to regulate all financial services in IFSCs in the country, Mumbai being the country's economic, financial and commercial capital is the best choice and place to relocate the IFSC in it, said Pawar.

"Dear Prime Minister, you have made your mark on the world forum with your vision, wisdom, clairvoyance and political acumen. I expected you to take a rational, judicious decision, keeping aside the state politics and consider it as an issue of utmost National Importance.

I urge you to reconsider the decision to shift the IFSC in Gujarat and relocate it in Mumbai on merit basis. I hope my letter will be taken in the right spirit, and a true statesmanship is exhibited on your behalf, considering to establish the IFSC in the Financial Capital of India, that is Mumbai," Pawar concluded.

"It may be recalled that on May 2 (Saturday) the Maha Vikas Aghadi government of the Shiv Sena, NCP and Congress had cried foul over the Centre's move to base the IFSC Authority in Gujarat overlooking Mumbai, though the state Opposition Bharatiya Janata Party had fully supported the Centre.