Can Mumbai Become An International Financial Centre?

London's mayoral hopeful Sadiq Khan says the only political party that voted against his amendment to protect affordable homes in the city were the Tories. Khan's office had earlier pointed out that 573,753 social homes in London would be sold off under the plan of the government to extend the right to buy to tenants in housing associations.
Regardless of whether Sadiq Khan is right or wrong in opposing the right to sell social homes in London, a fact remains undisputed. Many of the social homes in London are in a bad shape. Many believe that demolishing them and building again would be the only way to solve this problem. The reason is not that these houses were poorly designed as many claim. These houses are badly maintained because the existing tenants did not make any efforts to maintain them. As Mumbai Chief Minister Devendra Fadnavis decides to take concrete steps to make the city an international financial center, it is important to learn from London's mistakes.
The Maximum City has made similar mistakes since Independence.
The city's potential to become an international financial center has been debated for years now. But, not many concrete steps were taken in that direction. Fadnavis, who has been in power for not more than 15 months, wants Mumbai to be an international financial center in the league of Singapore or Dubai. In the recent past, many cities like Delhi and Bangalore have performed better than Mumbai on many parameters, but Mumbai still remains India's financial capital. India's stock markets, the Reserve Bank of India, and the best commercial banks have their offices in Mumbai. Many of India's wealthiest businessmen live in Mumbai. Yet, many buildings in central Mumbai are crumbling.

Like social housing in London, rent controls legislations have left few incentives for landlords to maintain their buildings. This is because landlords earn too little from the buildings they have rented out. They do not have strong reasons to maintain them or renovate these buildings. Regulations that restrict floor space in buildings have prevented people from rebuilding buildings are the verge of collapse. Regulations would prevent landlords from building similarly spacious buildings after demolishing them. Social housing in London and rent-control regulations are policies that are different in nature. But, results are similar. One of the reasons why the National Capital Region and many other cities have relatively greater appeal because of such regulations, rents are lower in NCR, Bangalore and other cities. Office space is more expensive in Mumbai. Rewards do not always justify the costs.

However, Mumbai is a prosperous city. Years ago, McKinsey estimated that though Mumbai contributes nearly Rs 40,000 crore to the Maharashtra state government, it gets back merely 1-3 per cent of its contribution. Mumbai definitely has enough resources to make itself prosperous. It is, largely political constraints that prevent Mumbai from doing do.

How can Mumbai go about this?

• Mumbai's financial markets should be as competitive as financial markets in Singapore, London or New York. As economist Ajay Shah once pointed out, a foreign investor that plans to issue bonds in Mumbai has no reason to do so unless it is a sophisticated market with many options and allow them to issue bonds in any currency.
•  Repeal, or at least ease regulations that tenants and landlords equally find oppressive. Remove regulations that stipulate what to build, where to build and how to build. Good housing, green spaces, amenities and infrastructure matter as much for building an international financial center as better financial regulations. 
• Mumbai's economy should become more export-oriented. 
• Mumbai should become a more interesting city to live in. This is impossible in a city where living spaces and roads are so congested and a person has 1.1 square meter of open space. 
• Mumbai should sell off its idle land that is worth dozens of billions of dollars.