After Pranab who? Manmohan may get to keep finmin

There are still some political hoops for him to jump through, but it appears that Pranab Mukherjee, the official nominee of the UPA for the Presidency, will resign as Finance Minister on 24 June.

Mukherjee’s record as Finance Minister was, as we’d observed here , far from distinguished. Under his watch, the macroeconomic fundamentals withered spectacularly, and he oversaw the decline in India’s GDP growth to the lowest level in years. Some of it was, of course, the result of his own economic philosophy: a relic of an earlier Jurassic time when socialist mindsets dominated economic policymaking, Mukherjee’s natural instincts tended towards big government - except where government intervention was critical.

But in equal measure, his signal failure in office was the result of UPA chairperson Sonia Gandhi’s welfarist worldview, which infused the economic policymaking process at all levels of government. Sonia Gandhi had convinced herself that the UPA’s aam aadmi philosophy underlay its victories in the 2004 and 2009 elections, and so she gave expression to it by launching a succession of grandiose but ill-conceived and inadequately-funded welfare schemes.

Given that backdrop, whoever succeeds Pranab Mukherjee as Finance Minister will effectively be working with a handicap: the shadowy power behind the throne will be watching over the Finance Minister’s shoulder and dictating policy. And this time around, there is reason to expect that UPA political strategists are preparing for an election earlier than they are due in 2014 - evidently to wrong-foot the political opposition. That element too could determine the choice of Finance Ministers.

[caption id=“attachment_345457” align=“alignleft” width=“380” caption=“Whoever succeeds Pranab Mukherjee as Finance Minister will effectively be working with a handicap: the shadowy power behind the throne will be watching over the Finance Minister’s shoulder and dictating policy. AP”] [/caption]

So who is best placed to succeed Pranab-da, and what are his or her odds -and what are the chances of reforms being undertaken?

Montek Singh Ahluwalia.If Manmohan Singh had his way - and we know that he constantly doesn’t - Planning Commission Deputy Chairman Montek Singh Ahluwalia would be the next Finance Minister. Monty is virtually the last of the original team of reformers from 1991 who worked with Manmohan Singh. And although Sonia Gandhi has ensured that Monty’s influence even within the completely ineffectual Planning Commission remains severely curtailed (and his reputation tarnished, thanks to leaks about the Rs 35 lakh toilets and his luxurious junkets ), and although Monty himself hasn’t exerted himself overmuch in advancing reforms, he evidently enjoys the Prime Minister’s confidence, such as it is.

If Sonia Gandhi is preparing for an early election - in 2013 or even late 2012 - perhaps Manmohan Singh will look to persuade her that so long as her welfarist policy objectives are met, he should be allowed to have some say in advancing token reforms. He could use that as a pretext to bring in Montek Singh. But the chances of this coming about are fairly slim.

C Rangarajan. As Chairman of the PM’s Economic Advisory Council, Rangarajan, has ties to both the PMO and the finance ministry. Unlike Montek, he does not raise hackles among Congressmen. But as a complete non-politician, and an advocate of tight money policies, it is unlikely that he would get Sonia’s nod. But he will remain a permanent fixture in economic policy-making whether he is FM or not FM.

Manmohan Singh. Alternatively, Manmohan Singh could himself take over the Finance portfolio, again as part of a deal with Sonia Gandhi as outlined above. Of course, wearing two hats- of the Prime Minister and the Finance Minister- would be an onerous burden, but in any case, cynics will argue that he’s been a Prime Minister in absentia for much of the past three years. It’s also possible that Manmohan Singh will nominally take over as Finance Minister and allow Montek Singh to frame policy minutiae that reflects his own economic philosophy. This is perhaps the most likely outcome.

**P Chidambaram.**For all his strenuous exertions as Home Minister, Chidambaram has always made it clear that his heart still pines for the FinMin post. After all, it was here that he burnished his credentials as a reformer with his ‘‘Dream Budgets’ (which subsequently turned out to be nightmares). But he has made far too many enemies among his Cabinet and party colleagues who have been at the receiving end of his intellectual disdain. Even Sonia Gandhi may consider him too politically wily for her comfort. Moreover, Subramanian Swamy is still gunning for him in the 2G case, and his image has been dented by allegations involving his son Karti. The markets would cheer his return to North Block, but the party would not. The odds are against him.

Jairam Ramesh. When he was moved to the Rural Development Ministry in last year’s cabinet reshuffle, many commentators perceived it as a ‘demotion’. But as was made clear, he was being moved to a ministry that was to be a fulcrum of many of Sonia Gandhi’s pet schemes, including NREGA, and the Land Acquisition Bill, in which Rahul Gandhi had a keen interest.Earlier, in the Environment Ministry, Jairam Ramesh’s policy efforts effectively tied industry down to excess. But in recent times, as we’ve noted here , he’s been talking the reformist talk. Precisely how that squares with Sonia Gandhi’s aam aadmi worldview isn’t clear. But he could be a serious-enough contender under certain circumstances.

Anand Sharma. In recent times, he’s been at war with Jairam Ramesh, particularly after he felt that the latter was encroaching on his policy domain. The friction between them points to a certain political ambition. And although Sharma is said to have a good equation with both Manmohan Singh and 10 Janpath, it is open to question whether he is considered politically heavyweight enough to be given the FinMin portfolio. An unlikely candidate.

Salman Khurshid. He’s been a bit of a wandering minstrel, flitting from ministry to ministry without distinguishing himself in any way. But he too enjoys Sonia Gandhi’s trust, and although he has over time compromised his credentials as the moderate Muslim face of the government, he still enjoys political goodwill within his party. Plus the fact that he isn’t a heavyweight economic policy wonk may perversely qualify him for a post where, in the final analysis, it is Sonia Gandhi’s writ that runs. A dark horse candidate.

That’s pretty much the line-up as we see it. If we were the wagering kind, we would put our money on

(a) Manmohan Singh (either himself, or through Montek Singh Ahluwalia)

(b) Jairam Ramesh

(c) A rank outsider, perhaps Salman Khurshid.

Let’s see how this one flies…