Manmohan Singh takes over as Finance Minister, Pranab Mukherjee files nomination for Presidential polls

Will Manmohan Singh achieve what Pranab could not as FM?

As India is awaiting for some strong economic revival measures, pressure is mounting on if Prime Minister Manmohan Singh will deliver as the new finance minister.

In an interview to CNBC-TV18, AK Bhattacharya, Editor, Business Standard and Yogendra Yadav, Political Analyst discuss if Singh could achieve what Pranab Mukherjee could not.

Here is an edited transcript. Also watch the accompanying video for the full interview.

Q: I was reading your article yesterday which gave a summary of what Pranab Mukherjee managed to achieve and did not achieve. The question now is that Pranab Mukherjee and the astute politician that he was could not achieve consensus around a lot of these political hot potatoes of the FDI or diesel price hikes. Do you think whether the PM or any other new candidate that he tries to bring in will be able to achieve it or has UPA too been largely written off?

Bhattacharya: I think the problem that the UPA2 is suffering from is also a problem of not focusing on the kind of ideas that he itself had promoted. For example, what has been the progress on the UPA2’s idea of the Aadhaar project. For a moment, let us understand that this Aadhaar project was to have delivered subsidies to the targeted groups in a focused manner by reducing the overall cost of subsidies. Now we still don’t know what has been the progress on this project and this was UPA2’s big idea.

 Now my point is that whether you have a politician finance minister or whether you have the prime minister taking charge of the finance ministry for a short period, it is important for the UPA rulers. UPA guys need to get down to this basic job of focusing on what they need to do to bring down the overall subsidies level, bring down overall government expenditure. So, that the fiscal deficit position is better and at the same time, initiate a set of reformist measures, which revive sentiment in the market.

I don’t think that it is such a difficult not to crack, it is important that the PM sets a ball rolling with his initial statements which he did yesterday. But that will not be announced because this will perhaps keep the market happy for sometime but you need action on the ground, you need to bite the bullet.

Q: One thing is perhaps positive with two former Reserve Bank of India (RBI) governors in-charge of the finance ministry. Now we understand that Rangarajan will play a key role, you don’t have to explain to them the importance of bringing down the deficit and the deleterious impact it has on inflation, on current account deficit indeed on the whole economy. With that wisdom now having been established do you think definitely they will be able to deliver better on fiscal deficit than the previous regime? Do you think that just understanding the political experience is going to be inadequate because they are seriously lacking political clout?

Bhattacharya: To believe that Rangarajan and Ahluwalia, the two names that you mentioned, have just joined this government will be wrong. They are very much in the scene. Rangarajan has been the chairman of the prime minister’s economic advisory council for several months.

Q: I meant more hands on in the finance ministry.

Bhattacharya: My belief is that what you see is that there is no team that has been built at the implementation level for the last three years. The last three years ,one of the major progresses the UPA2 has been, the connect between the prime minister’s office (PMO) and the finance ministry have not been that strong. I think for any successful reforms programme or management of the macro economy it is important that the PMO and the finance ministry act in sync.

I think that connect had been very weak in the last three years. So the one good thing that will happen now is that the connect between PMO and the finance ministry will be better and so you can see some more guided action towards managing the macro economy.

Q: Do you think the Prime Minister will keep the finance portfolio for good or is he likely to keep this as a stopgap arrangement and look for an alternative pretty quickly?

Yadav: There is ofcourse no official confirmation as yet but my expectation is that once the PM has taken this, he might wish to keep it for sometime, sometime could mean something like four-six months. He has had experience in this.

This is a field in which the government has not done very well. He has good reasons to believe that he has some expertise in the matter and this provides him with a golden opportunity to leave a certain stamp of his personality and his governance before he demits office in 2014. So he might wish to keep it for sometime. It is not clear at all whether that sometime would be something like six months. Usually PMs do not keep such an important portfolio for a longer period than that.

Q: Have there been any instance in past when the PM has retained the finance portfolio for a long time, how has the performance been?

Yadav: There have been earlier instances for example Jawaharlal Nehru kept the foreign affairs ministry with himself for almost the entire period. There have been other instances too but yes, it is exceptional, it is very unusual. The real question is whether the point of time that the country is passing through right now is unusual.

 Does that require that kind of an unusual step? Remember here is our PM whose core competence is in this very ministry so he might wish to keep it for sometime. I was not surprised therefore when he was in no hurry to appoint a successor to Pranab Mukherjee.

Source:http://www.moneycontrol.com

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