With more sops for PM’s GIFT-City, Mumbai’s IFSC dream fades further

The absence of any major allocations for Maharashtra in the Union Budget has riled leaders of the Maha Vikas Aghadi(MVA) government, who accused the Centre of “step-motherly” treatment.

On the budgetary allocation for election-bound Kerala, Assam, West Bengal and Tamil Nadu, Chief Minister Uddhav Thackeray said the Budget was for the country and not for Assembly polls.

“I will take some time before I speak on the Budget. But based on what I’m hearing is that we need a Budget for the country, not for the elections…,” said Thackeray while speaking to media persons.

State Finance Minister and Deputy Chief Minister Ajit Pawar said, “Maharashtra contributes the most to India’s growth. Yet the Budget has no substantial allocation for the state.” He added, “All Maharashtra MPs across party lines should meet the Union finance minister and urge her to do away with this injustice.”

“From the farmers protesting at the Delhi border to the millions of youths who have lost their jobs during Covid-19, all have been disappointed by the Budget. The tradition of doing injustice to backward, tribal and minority communities is continued in this Budget as well. There is nothing substantial for women’s schemes,” the Deputy CM said.

Maharashtra Congress president and state Revenue Minister Balasaheb Thorat called it a Budget eyeing the polls. “Is this a Budget document or a poll manifesto or is this a vision document on sale of national assets,” he asked, while accusing the Centre of “step-motherly” treatment to Maharashtra.

The Budget has dealt a body blow to Maharashtra’s plan of setting up an International Financial Services Centre (IFSC) in Mumbai with the Centre further incentivising investments in Gujarat’s International Finance Tec-City (GIFT).

In her Budget address, Union Finance Minister Nirmala Sitharaman, while omitting any mention of Mumbai’s proposal for building a similar global financial hub, announced additional tax holidays and concessions for investors in the GIFT-City, which is located about 12 km from the Ahmedabad international airport and 8 km from Gandhinagar.

A pet initiative of Prime Minister Narendra Modi, the GIFT-City, the country’s only designated IFSC so far, is coming up as a multi-speciality SEZ on a 358-hectare space, out of which 105.62 hectare has been declared as SEZ area. Sitharaman said, “The government is committed to make the IFSC in GIFT-City a global financial hub. In addition to the tax incentives already proposed, I propose to include, among others, tax holiday for capital gains for aircraft leasing companies, tax exemptions for aircraft lease rentals paid to foreign lessors, tax incentive for relocating foreign funds in the IFSC and to allow tax exemption to the investment division of foreign banks located in the IFSC.”

Mumbai, the commercial capital, where the idea of an IFSC was originally conceived, has been pushing for Bandra Kurla Complex (BKC) to get the same concessions granted to the GIFT-City as an SEZ. But the Centre has so far been non-committal about it. While announcing the fresh perks for GIFT-City, Sitharaman made no mention of the Mumbai plan.

Earlier when a BJP-led government was in power in Maharashtra, the state had proposed a ‘hub and spoke’ model for BKC and GIFT-City, pitching the Mumbai facility to be the “hub” or the front-end for major financial activities while they set up a larger base for more extensive activities in GIFT-City. But even this has been met with the cold shoulder by the Modi-led government.

“The step-motherly treatment given to Maharashtra in the Budget is evident. The IFSC in Gujarat has been strengthened whereas Mumbai, which makes the highest contribution to the country’s growth, has been deliberately ignored,” said a senior Maharashtra official. Just as there was no notable mention of any project from Maharashtra, the state government’s income from the central tax pool will also be hit as the Centre has reduced the share of states in the divisible pool of central taxes. The divisible pool itself has also shrunk in size.

Shiv Sena MP Sanjay Raut also said the Budget had an eye on upcoming polls, “This is not a national Budget but the Budget of a party which is distributing money like one does before elections. They have given money for Nashik and Nagpur Metro but nothing for Mumbai Metro.”

Sitharaman has announced central assistance to Metro projects in Nagpur and Nashik.

Maharashtra’s Leader of Opposition Devendra Fadnavis, however, termed it a Budget that gave a new fillip to the aspirations of the public post the coronavirus crisis, turning it into an opportunity.