Centre sets off worrying tensions with Mumbai

A highlystrained relationship between Maharashtra and New Delhi is being tested by therecent decision of the Modi Government to set up the International FinancialServices Centres Authority with its head office at Gandhinagar in Gujarat. Thisis where India’s first International Financial Services Centre is located atthe Gujarat International Finance -Tec City (GIFT City) in Gandhinagar. Ittakes the Gujarat city a step ahead in its aspirational goal of becoming aglobal financial centre on the lines of Hong Kong and Singapore in the East orLondon in the West. A notification from New Delhi virtually snatched theposition from Mumbai which is the financial capital of the country and set upthe “IFSC Authority”, a financial regulatory authority for the first time inGujarat.

The decisioncomes at a time when the Uddhav Thackeray-led Maharashtra Vikas Aghadi isstruggling to curb the spread of Covid-19 in Mumbai and other cities in theState. It is seen in political circles as an open challenge to the position ofMumbai and one that the State Government could not leave unanswered. The firstresponse came from a normally restrained Sharad Pawar who questioned thedecision and called it “disappointing, and a move against Mumbai’s establishedstatus as the nation’s financial capital.” He urged Modi to reconsider thedecision and not denigrate the stature of the Prime Minister with decisionsthat are not “broad, inclusive and of a national level”.   But what he wrote to Modi seems to havereceived more attention as it came with an implicit warning that the move toshift financial institutions and business houses away from Maharashtra wouldcreate “unnecessary political disturbances”. Pawar’s NCP is one of three constituents of the MVA and while he himselfholds no official position, the Maratha leader is seen as a guiding lightbringing to the table five decades of experience, four terms as chief minister,astute strategic and administrative skills.

   

His wordsare a clear pointer to strains that are more than the usual political tug-of-war,and hark back to the old strained relationship between Gujarat andMaharashtra.  At the time of thereorganisation of States along linguistic lines (after Potti Sriramalu’s fastunto death resulted in the creation of Telugu speaking Andhra Pradesh), thethen bilingual State of Bombay included Maharashtra and Gujarat. This is whenthe Samyukta Maharashtra Movement took root for creating of a State out of theMarathi speaking areas. The demand was fought as Morarji Desai, a Gujarati wasChief minister of Bombay State and was responsible for police action in which105 activists were killed. A memorial stands in their honour today at aprominent roundabout that used to be called Flora Fountain and is now known asHutatma Chowk.

Eventually,Maharashtra was born on Labour Day 1960. The State celebrated its 60thFoundation Day this month. But the 1960 formation was not without a GujaratiMarathi tussle, the battle being over Bombay staying with Maharashtra orbecoming a union territory. When Bombay went to Maharashtra, and became itscapital, Gujarati business houses and industry were upset as they claimed tohave built the city and made it the business capital. But Mumbai had moreMarathi speaking people than Gujaratis. That wound still stays and politiciansin Maharashtra are always wary of New Delhi’s attempts to reduce the status andposition of Mumbai as a financial centre.

Thebackground shows the nature of the trouble, the depth of the issue andpotential for creating fires that can be difficult to control. Utterances bythe Shiv Sena, editorials in its mouthpiece Saamna and questions even by theUddhav Thackeray’s cousin Raj Thackeray all point to the consternation that theCentres’ decision has created.

The ManmohanSingh-led UPA initiated a proposal to upscale Mumbai and place the city in thehighest echelons of finance, fashioning it into an international financialcentre which would bring back the money that had migrated to Dubai, Singapore,London. Towards that goal an IFSC was proposed by the Making Mumbai anInternational Finance Centre (MIFC) committee headed by Oxford InternationalFinance Chairman & CEO Percy Mistry. The IFSC is a nerve centre offinancial services within a country, bound by a set of rules and regulationsdifferent from the rest of the country. Then came the global financial crisis of 2008 and nothing moved. ButNarendra Modi, then chief minister of Gujarat, took up the chance to build arival financial hub and IFSC in 2012.

Mumbaicurrently hosts all the financial regulatory authorities and institutions fromthe Reserve Bank, Securities and Exchange Board of India, Bombay StockExchange, National Stock Exchange, major bank and business headquarters. TheIFSC and IFSC authority would have enhanced the city’s image as an importantfinancial node, besides creating some 200,000 jobs from direct and ancillaryservices associated with the IFSC.

The strongprotests from Maharashtra that Modi and Gujarat have “hijacked” the financialregulatory authority and are trying to build a rival centre in the neighbouringState are quickly downsliding into the bitter history between the two States.In the past the rivalry between the two linguistic groups has often reached thestreets. The Shiv Sena led by its founder Bal Thackeray first attacked theGujaratis, accusing them of taking away business and opportunities fromMaharashtrians and exploiting locals. This has never left the agenda. Eversince Modi proposed the “bullet train”, he has been attacked by Maharashtra andthe train labelled as an unnecessary expenditure.

The move toshift the IFSC authority comes at a time when there are many points ofcontention between the Modi government and the State. The rise in Covid numbershas had BJP leaders criticising the manner in which the Maharashtra Governmentis handling the government, some even calling for the army to control thesituation. The recent lynching of two people clad in saffron at a place on theoutskirts of Mumbai, have again led to a war of words between the BJP and theruling constituents of the Maharashtra government. But the current dispute isriskier in that it reignites old tensions and can cause trouble at a verydifferent level. A Prime minister from Gujarat, seen as favouring Gujarat, at atime of a pandemic, when numbers are rising in Maharahstra, taking potshots atthe State and its former ally the Shiv Sena, which is in power here, openingold wounds that go back to the formation of Maharashtra. This gives anindication of the trouble being brewed from New Delhi.

(The writer is the Managing Editor of The Billion Press)

(Syndicate: The Billion Press, editor@thebillionpress.org)

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