Whose GIFT is it anyway?

By Rajiv Shah
Ever heard of a proposed location called Gujarat International Finance Tec-City (GIFT)? If you haven’t, you are either ignorant or you have actually missed out on grabbing a real opportunity. At least this is the conclusion one should draw after perusing through an authoritative presentation on the dream project of Gujarat’s No 1, chief minister Narendra Modi, dished out by his powerful propaganda machine.
Believe it or not, this high-level presentation on the proposed state-sponsored GIFT project declares that “85 per cent of Gujarat’s residents want to relocate to GIFT.” Interestingly, the presentation is quiet on which “Gujarat’s residents” it is talking about, where the survey was made, and by whom. As if this isn’t enough, it insists, “While only 24 per cent of non-residents (sic!) are willing to shift to Gujarat as a state, the percentage almost doubles (45 per cent) when it comes to shifting to GIFT.” Again, no sources have been quoted.
If you do not know what GIFT is about, then you’d better know it now – it is proposed on a 500 hectares land next to a river called Sabarmati, which is supposed to flow quietly along the state capital Gandhinagar, but is virtually dry as of today. Even as two out of 160 proposed high-rise towers are being built at the project site off the state capital across Sabarmati, plans are being worked out in the top state powerdom in Gandhinagar to fill up the Sabarmati portion next to GIFT with waters from the perennial Narmada, flowing about 250 kilometres down south, via the Narmada canal.
The presentation further wants one to believe that GIFT, proposed as an international financial services centre, will be the top thing in India, and the best in the world. Claiming that “GIFT will exceed ICT services of comparator cities”, it wants one to suppose that it is all set to beat flat all others, old and proposed – including Dubai International Financial Centre, South Korea’s Songdo International Business District, New York’s New World Trade Centre, London’s Canary Wharf, the Chinese Pudong which houses Shanghai Stock Exchange and World Financial Centre, Paris’ business district La Defense, Singapore, London Stock Exchange, New York Stock Exchange, and Tokyo.
The presentation’s ratings, in fact, show only GIFT as “Excellent” in every sector – “Overtaking” Place, Triple Play, Smart Buildings, Faster Setup, Competitive Service Provision, All Fibre, Mobile/ Wireless, Trading Platform and Data Centre. Quoting the source as British Telecom, the presentation says that all other “comparator cities” may have “Excellent” rating in several sectors, but certainly not in all. They are all dotted with “Poor” and “Reasonable” ratings, too. Only on one count – Sub-Sea Connectivity – our GIFT falters – it’s half “Excellent” and half “Reasonable”.
But the presentation is totally quiet about the rating of international financial centres, which is what GIFT is supposed to be. And, herein where the crux lies. While there is considerable reluctance to part with the complete feasibility report on GIFT, prepared by top consultants McKinsey & Company, whatever that has trickled down suggests where things stand for GIFT today.
The “demand assessment” by the consultants says that while all Indian cities lag far behind global financial centres, Ahmedabad’s ranking is No 8 even among Indian cities. On a scale of 10, existing international financial centres (IFCs) London, New York city, Frankfurt and Singapore have an average rate of 6.5, and emerging IFCs like Hongkong, Labuan, Seoul, Sidney and Dubai are rated on an average 5.4. India’s No 1 Mumbai is rated 3.2, followed by Delhi 2.8, Chennai 2.3, Kolkota 2.2, Bangalore, Pune and Hyedabad 2.1 each. Then comes Ahmedabad with 1.8 rating, followed closely by Chandigarh and Jaipur.
A year after Modi announced GIFT in 2007, a senior Indian Institute of Management (Ahmedabad) professor, who is a renowned expert in finance, told me that GIFT would be a “non-starter”, as nowhere has it happened in the world that a financial capital, once established, is shifted to some other place. “This has been tried with little or no success”, he said, adding, “In the age of ICT, office space is shrinking. You don’t need 500 ha for establishing a financial centre if you can do it in 15 ha.” He confirmed, GIFT was never discussed either with him or any other financial experts he knew.
GIFT’s plan was first floated by former chief secretary Sudhir Mankad during his tenure (2005-07). He previously was additional secretary, economic affairs, Government of India. With access to the well-known “Report of the High Powered Committee on making Mumbai an International Financial Centre”, authored by Percy Mistry, before it was submitted to the Ministry of Finance, Mankad – who is now GIFT chairman – reportedly gave its draft to Modi saying, “We must grab the opportunity ahead of Mumbai.”
Not without reason, Modi announced GIFT almost simultaneously when Mistry submitted the report in 2007. This was in conformity with the known Modi tactic of trying to strongly make his presence felt in the competitive world of Indian politics.
Since 2007, not much water has flown down the dry Sabarmati. GIFT land was handed over to IL&FS, the 50:50 partners in the project, for Re 1 in January 2011. While two towers are being built, there are yet no confirmed bookings, to quote a top GIFT executive. Meanwhile, senior government officials – mainly those who know financial issues – continue doubting GIFT’s financial feasibility. Their argument runs on lines similar to that of the IIM-A professor, and they insist, without compunction, that “GIFT will become a real estate haven, nothing more.” They scoff at the very idea of those at the top in Bandra-Kurla Complex in Mumbai shifting to GIFT, which is what the Modi government expects to happen.
Among others, former chief secretary D Rajagopalan, who previously served as additional chief secretary, finance, with the Gujarat government, has had his own doubts on GIFT. He and others know – GIFT or any other financial centre would have to heavily depend on financial reforms in the country, which is not in the state’s hands. Officials quote Rajagopalan (who is now Gujarat’s chief information commission) as asking his colleagues, junior and senior, in 2009, “Will GIFT ever be successful?” Referring to Rajagopalan, a senior official, occupying a key post, also quoted a top state-based tycoon as telling him, “GIFT is so off-the-mark. Even the location doesn’t excite.”

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