Millennium Post

Rivalry with Pranab eh!

If budget is an economic expression of a political agenda, outgoing Finance Minister Palaniappan Chidambaram’s ‘vote on account’ or interim budget until the next elected government comes to power towards May-end has more than achieved that purpose. He wants the next government, no matter which group forms it, follow his, albeit the UPA’s economic policy. A tall order, indeed. Maybe, also his usual exhibition of arrogance. The finance minister was in his acrobatic best no matter how his unsolicited advices tasted to his target audience in the opposition.

Gutsy Chidambaram did which few others in the present union cabinet would probably not dare do. Not only he offered indirect tax concessions for a host of items, reduced service tax, granted interest waiver on education loans and hijacked rival BJP’s earlier 2009 election agenda to provide ‘one rank, one pension’ for defence servicemen looking for their vote support, but also lectured the next government on how they must manage his legacy. The tax sops were valid up to 30 June, at least a month inside the next government’s tenure.

Typically, Chidambaram gave full marks to himself as finance minister and also the UPA government. He pooh-poohed the local as well as global concern of India’s economic downturn for the second successive year, policy paralysis and governance deficit. Instead, he chose to project a 10-year economic growth average under UPA I and II to counter his and UPA’s critics. Who knows it may have been intended to snub even some of his cabinet colleagues, including the prime minister, who have been openly apologetic about the poor performance of economy, policy paralysis and governance deficit.

His interim budget speech may have also been meant to serve as a lesson to the Congress party’s poll campaigners on what a ‘positive communication’ means. Lately, Chidambaram was officially elevated as a party ‘spokesperson’ although he may not be a great believer in hotly contested debates. However, few have exhibited courage to pin down, let alone crucify, this finance minister, who would have probably been the best pick as the UPA’s truly assertive prime minister.
The entire opposition was, for the first or, maybe, the last time, dumbfound as Chidambaram charted his ‘Ten Commandments’ for the next government and warned them not to do anything which is not in the interest of the national economy and that ‘there is no room for any aversion to foreign investment.’ The first of his 10 commandments was on fiscal deficit, which he said should not exceed three per cent of GDP. Last two years under Chidambaram fiscal deficit was 50 per cent higher than the limit he prescribed for future finance ministers. The next was containing the current account deficit (the negative balance in total foreign capital inflow and outflow in the course of trade, debt service cost, remittances, investment and invisibles) which, ironically, reached alarmingly its peak under his latest tenure as the finance minister.

The third was the price stability and growth. Unfortunately, his tenure failed to ensure both price stability and higher growth. The advices, which he mostly failed to practice, pour on encompassing areas such as further financial sector reform; new financing structure for infrastructure; focus on export manufacturing; subsidy only if absolutely necessary; governable future cities; priority to skill development, health and sanitation; and sharing responsibility between states and centre.
Yet still, the most unfortunate part of his budget speech was a less charitable reference to his predecessor, Pranab Mukherjee, now the President of India, terming the latter’s interest subsidy concession on education loans as ‘discriminatory’ and Chidambaram’s effort to correct the situation by offering moratorium on interest payment on education loan with retrospective effect that is prior to Mukherjee’s 2009-2010 budget.

Chidambaram said; ‘Hon’ble members will recall that my predecessor, Shri Pranab Mukherjee, had, in the Budget of 2009-2010, introduced the Central Scheme for Interest Subsidy in respect of education loans disbursed after 1.4.2009 under which Government took over the burden of interest for the duration of the period of study and a little beyond. The scheme brought great cheer to student-borrowers and their families. However, I have noticed a sense of discrimination among students who had borrowed before 31.3.2009, struggled to pay interest during the period of study, and continued to service loans afterwards. I think they deserve some relief. I therefore propose a moratorium period for all education loans taken up to 31.3.2009 and outstanding on 31.12.2013…’

The rivalry between Mukherjee and Chidambaram and their dislike for each other is well known, especially after Mukherjee’s note to the cabinet on Chidambaram’s role in 2G spectrum allocation. Mukherjee’s imposition of $ 2.2-billion retroactive tax on Vodafone after the latter took over the Hong Kong-based Hutchison’s stake in cellular mobile phone business in India came under criticism by Chidambaram, calling for the prime minister’s intervention and the setting up of a panel to review the measure by service tax expert Parthasarathi Shome. Following the report of the review panel, the government delayed a clampdown on ‘tax avoidance’ until 2016. Termed as the General Anti-Avoidance Rules, or GAAR, would come into effect from 1 April 2016, Finance Minister Chidambaram had announced after the review panel submitted its report.

However, all said and done, with Chidambaram decided to stand out, the absence of this colourful, often quick-tempered and generally vindictive top Tamil law professional turned politician will be felt in next Lok Sabha.IPA
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