With the economy continuing to tank under Pranab Mukherjee’s stewardship, one has to presume that the finance minister’s job is now wide open, especially since the incumbent himself has talked about walking on the lawns of Rashtrapati Bhawan.
After taking over from P Chidambaram after the Lehman crisis and the 26/11 Mumbai terror attacks, Pranab received two slivers of luck – a quick reduction in inflation, thanks to the global crash in oil prices post-Lehman, and the smart revival of the economy in 2009-10 and 2010-11. This led everyone – and especially the economic mandarins surrounding him and the Prime Minister, from Kaushik Basu to C Rangarajan to Montek Singh Ahluwalia - to believe that somehow India is immune to deceleration and 8-9 percent GDP growth is its birth right.
Now that all of them – Pranab, Rangarajan, Montek and Kaushik – have egg on their faces, having got all their growth and inflation and fiscal deficit forecasts wrong consistently for nearly two years running, it makes sense to bring a new broom to sweep North Block clean if Pranab Mukherjee opts out.
There is no buzz around the finance minister’s job as yet, as that will have to wait till the Congress nominee for president is decided. But having brought nothing but bad news on the economy for the last two years, Mukherjee’s is no longer a credible face in the finance ministry. Whatever his political skills, industry certainly has not been too happy with his boring budgets and tendency to hark back to the old days of bureaucratic control and retrospective taxation.
Now, the political rationale for keeping him in the finance ministry is also over. He hasn’t delivered, whether on the growth axis or the social spending one. He has managed to do damage to both, though it is not his fault alone. Sonia Gandhi’s politics did him in.
The chances, thus, are that 10 Janpath will favour a fresh face for the job.
The normal favourite for the job would be Chidambaram, who has made no secret of his preference for the finance ministry over the home ministry in the past. But the home minister has been under relentless attack from the BJP and Subramanian Swamy, who has sought to make Chidambaram a co-accused along with A Raja in the 2G scam. Both BJP and Swamy have also been gunning for him for favours allegedly shown to his son Karti by Maxis, which bought Aircel from C Sivasankaran during UPA-1, when Chidambaram was finance minister. Swamy’s petition against Chidambaram is pending in the Supreme Court, which has reserved it order in the case.
Sonia Gandhi cannot afford to have another key minister who is vulnerable to political and legal attacks, leading to possible political embarrassment. Chidambaram can thus be only considered a weak candidate for now.
Among existing senior Congress ministers, Antony, Salman Khurshid, SM Krishna and Kapil Sibal can all be ruled out either because they have no clue on finance or because their current jobs will tie them down in the foreseeable future. Kamal Nath and Jaipal Reddy, two other senior ministers, have not exactly distinguished themselves too well in their current jobs to merit a promotion.
This leaves open two possibilities: a non-politician outsider like Montek Singh Ahluwalia, whom the Prime Minister would love to see in the job, or one more minister who untainted by failure.
Given the recent controversy raked up over his foreign trips, Montek’s reputation has taken a knock. As we noted in Firstpost some time ago, Sonia is not particularly inclined to let Manmohan have his way on Montek. And there is no reason to think she will do so now just when the party has to achieve two opposite things: ensure the economy is stabilised, and still find resources for her social spending plans in the run-up to 2014.
A dark horse could thus be in with a chance for the FM’s job, in case it is up from grabs.
Who could this dark horse be? It has to be someone who has both reformist and social leanings.
Now listen to these statements:
“Whatever the government will do, the party will back it. The time for pussyfooting is over. We still have two years left and it is time to take the bull by its horns. Whatever the reaction, we will face it. We have to. Leadership is about taking people on a trajectory where they were not going or didn’t want to go. It is not about going where you were already going.”
“Governance is about taking tough, even unpopular, decisions.”
“Of the three Fs – food, fuel and fertilizer – the subsidy for fuel is the most perverse. You can still make a case for food subsidy. And, to some extent, for fertiliser…But if we have to start attacking subsidies, then fuel is a good place to begin. It has been postponed for too long.”
“I favour a rational subsidy regime, targeted at those who need it. I am against subsidies that favour the rich. Why should we subsidise corporate entities through concessions?”
Sounds like a future finance minister?
The speaker is Jairam Ramesh, Minister for Rural Development, former reformer-turned-social-spending votary. These are the words he used in an interview to The Economic Times earlier this week (Read the full interview here).
Ramesh has been a pro-reforms babu in Manmohan Singh’s 1991 finance ministry and later in P Chidambaram’s finance ministry during the short-lived United Front regime. He turned pinkish in his economic views after the defeat of the NDA in 2004 which brought the UPA under Sonia Gandhi back to power. He now talks inclusive economics. As Minister for Environment and Forests he gained the respect of India’s green tribe, and as Rural Development Minister, he is currently shaking up the NREGA scheme.
His CV looks goods. Don’t count him out as a possible replacement for Pranab Mukherjee – if the latter moves on or is pushed out.