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

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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)

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Comments (3)
srg09 wrote:
this guy should have gone long time back, but sonia gandhi needs such inept and incompetent career politicians to support her own base and agenda, with disastrous consequences for the country. a billion and quarter population with a third near the poverty line have squandered many many opportunities to get rid of these idiots.

May 16, 2012 7:11am IST  --  Report as abuse
Tradecent wrote:
Mind you words. We cannot blame Pranab for the current crisis. Should the crisis exists in the past, the then FM might also get strangled. The present situation is unique and we aren’t the only victims. Yes, there are some goof ups in decision making but one cannot guarantee that these things won’t happen if the position was led by another leader. I am not supporting him but I am trying to figure out what could have made him confused in putting forward a well organised financial design. He has been termed as ‘utter failure’ ever since the provoking issues like GAAR, P-notes and retrospective tax came into light. Believe me guys, the above ideas would actually fuel India’s growth in the future. The selfish domestic and foreign fat investors are influencing the political and financial path of India. FM and RBI are no longer the ultimate decision makers. They have to bow to the most influential people. And the funny thing is, most of these lobbyists are in UPA :)

May 16, 2012 8:11am IST  --  Report as abuse
muralisk wrote:
Not really sure if the new FM can help India in trying to make up for the last two years and the next two years as UPA2 has messed up big time. Pranab Mukherjee is a seasoned trouble shooter for Congress Party, but he really messed up India’s fiscal situation. Shame, we have lost 4 good years …

May 17, 2012 11:00am IST  --  Report as abuse
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