BREAKINGVIEWS - India has chance to get a good finance minister

MUMBAI Wed May 16, 2012 4:19pm IST

1 of 3. Finance Minister Pranab Mukherjee attends the three-day long India Economic Summit 2009 at the World Economic Forum in New Delhi November 10, 2009.

Credit: Reuters/B Mathur/Files

Related Topics

Stocks

   

MUMBAI (Reuters Breakingviews) - India has a fantastic opportunity to get a good finance minister. The incumbent, Pranab Mukherjee, has been an abject failure: the rupee's record low is just the latest example of the economy's problems. Now Mukherjee wants to move to the ceremonial role of president. Sonia Gandhi, the leader of the governing Congress Party, should bite his hand off.

Mukherjee's political skills are top notch. But he has allowed the fiscal deficit to balloon to 5.9 percent of GDP; he hasn't tackled subsidies for fuel, fertiliser and food; nor has he embarked on any major economic reforms, for example in banking, insurance or pensions. Meanwhile, India's growth rate has slumped to around 7 percent. A big worry is the decline in investment. Foreigners have been put off by the government's retrospective tax grab against Vodafone (VOD.L); and domestic investors have been deterred by the lack of vision, pork barrel politics and general sense that the economy is in decline.

Kicking Mukherjee upstairs to the position of president would therefore be a chance to improve things. It would, of course, only actually make things better if the government then had the guts to put in somebody who was willing and able to address India's myriad problems. Good options would include Raghuram Rajan, the former IMF chief economist, and the co-founder of Infosys (INFY.NS) Nandan Nilekani, who is presently working on the ambitious unique identification number. One idea could even be to bring back Manmohan Singh, the prime minister, as finance minister and find a new prime minister. Singh clearly did that job better than his current one.

The snag is that Sonia Gandhi has, to date, shown herself unwilling to do anything radical. So even if Mukherjee does become president, the malaise that is affecting Indian economic policy making seems likely to continue.

CONTEXT NEWS

- The term of Pratibha Patil, India's first female president, will end in July 2012. The parliament will elect a new president in July. The formal process to elect the next president will commence on June 16.

- Finance minister, Pranab Mukherjee, is emerging as a strong candidate to win the election, with board support across the political spectrum. An India Today-Ipsos poll, published on May 10 had former President Abdul Kalam leading the field with nearly 14 percent of public support, followed by Mukherjee with around 10 percent.

(Editing by John Foley and David Evans)

FILED UNDER:

SAARC Summit

REUTERS SHOWCASE

E-Commerce Boom

E-Commerce Boom

Online grocers come up trumps in India's e-commerce boom   Full Article 

Reuters Poll

Reuters Poll

GDP growth to slow to 5.1 pct, but no rate cut yet  Full Article 

Oil Prices Fall

Oil Prices Fall

Oil at four-year low as OPEC production cut looks unlikely  Full Article 

Hughes Dies

Hughes Dies

Australia batsman Hughes passes away aged 25  Full Article 

Jamini Roy

Jamini Roy

Photo Gallery – Bengali household name Jamini Roy’s paintings  Full Article 

Google in Europe

Google in Europe

Insight - Behind Google's Europe woes, American accents  Full Article 

India-focused Funds

India-focused Funds

India-focused hedge funds up over 40 pct YTD - HFR  Full Article 

Trade Deal

Trade Deal

WTO postpones trade deal by a day after last-minute objection.  Full Article 

Land Disputes

Land Disputes

Disputes over land for industry on the rise in India, angering locals - charities  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage