By KS Vijay Elangova
Chennai: As an established trading port of British India since the 1600s, Chennai has always had the flair and inherent attributes to be a vibrant financial center. The announcement in the budget of Tamil Nadu Minister of Finance, PTR Palanivel Thiaga Rajan, allocating 60 acres, which may not match the ambition, around the Nandambakkam Trade Center to create a financial city is a welcome move for various reasons, including the deep understanding of the potential of Chennai. for a flourishing market center.
As the second most developed economy in the country according to the state’s gross domestic product, the government of Tamil Nadu had been granted amnesia for not projecting and developing Chennai as a major financial center. As a major manufacturing and information technology hub in addition to being a thriving market, the city had the organic latency to become a vibrant financial center in the country thanks to its strategic location and good connectivity.
As a mixed economy with a large base of manufacturing and IT services, Chennai has always attracted a substantial flow of foreign investment, as evidenced by the presence of the world’s largest multinational corporations operating in the city.
The presence of a large pool of financial talents, dynamic export and import trade, efficient international maritime and air connectivity, significant knowledge capital, better geographic positioning than the nascent city of Gujarat International Finance Tec ( GIFT) in terms of east and west connection and the presence of major global banks, should propel Chennai to become one of the major financial centers.
At the same time, the construction of other extensive networks, the establishment of support for the free movement of capital, a sound tax legal system, the construction of a solid basis for a full range of financial products and a simple tax regime. and weak (incumbent on the Center), are the most missing attributes that the State needs to vigorously pursue the policies to be constructed.
However, to be counted among the world’s financial cities, it is imperative to be a part of the stock exchanges. The absence of one in the city puts Chennai on the back foot.
The Madras Stock Exchange, established in 1937, was the first for South India, but shut down in 2015 due to the lack of substantial trade and the political will and vision for the to support. It would have been historic if we had yet had it in competition with other exchanges in the country such as Mumbai.
Chennai’s gross regional product is valued at $ 78 billion, and $ 200 billion with industrial zones in purchasing power parity terms, with a number of domestic and international businesses flourishing. The Mumbai exchange these days doesn’t inspire as much as it doesn’t make much of a difference to its growth. It is unfortunate that Chennai has been left behind as cities like Bengaluru and Hyderabad have overtaken it in recent years.
Chennai has global development prospects modeled on cities such as Sydney, which is moving to attract major investment while trying to project itself as a possible successor to Hong Kong.
Chennai has similar characteristics to Sydney, which surprisingly contributes, as a mixed economy, to a quarter of Australia’s gross domestic product ($ 461 billion at purchasing power parity).
Almost three decades have passed since the globalization surge of the 1990s, and the city’s potential has not been effectively cultivated. But further negotiations on these lines have started to raise hopes that Chennai may soon be the address for a major global financial services industry.
Among the world’s financial centers, the rise of Hong Kong shows that it did not take long to become a major financial industry after it ceded to the British in 1842 through the Treaty of Nanjing. Hong Kong’s manufacturing base has also had a positive impact on its rapid growth as a key global financial services market. Drawing on Hong Kong’s experience of how financial service centers thrive, the main attribute can be found in transparent regulations related to global standards.
The current finance minister with his global financial expertise could help strengthen Chennai’s position.
The catharsis of the previous trend may be slightly painful as it prepares to put in place austerity measures to tackle public debt and a possible increase in local taxes to deal with the drop in income due to the pandemic, in the short term, while pursuing plans to make Chennai a major financial hub for the future.
(The author is a journalist, columnist based in the United Kingdom)