:: Paranjoy Guha Thakurta

Can Pranab make tycoon and common man smile?

By Paranjoy Guha Thakurta

May 31 : Nearly a quarter century ago, he was occupying the most spacious room in the western wing of the stately building called North Block, located on top of the capital’s Raisina Hill. This was a time when Prime Minister Manmohan Singh was the Mumbai-based Governor of the Reserve Bank of India (RBI), the country’s central bank and apex monetary authority.

The roles have not exactly been reversed although Dr Singh is now Prime Minister for a second term while the diminutive, bespectacled Pranab Mukherjee is heading the all-powerful ministry of finance. He had indeed warmed that seat for a brief period when he acted as the head of the Government of India and presented an interim Budget and vote-on-account in Parliament on February 16, 2009.

The significance of his appointment goes beyond certain well-known personal details, but these are nevertheless worth recounting. Born on December 11, 1935, he is barely three years older than the Prime Minister. He shares Dr Singh’s humble origins: both had to walk many miles to go to school. He’s been a teacher, a lawyer and a journalist. First elected to the Rajya Sabha in 1969, there is a story (perhaps apocryphal) of how he became deputy minister for industrial development in the Union government. He had gone to Rashtrapati Bhavan to attend a swearing-in ceremony of ministers as a spectator when somebody told Indira Gandhi that the number of ministers being sworn in was "inauspicious" — apparently this was how he was suddenly roped into the council of ministers.

He has been elected to the Upper House of Parliament no less than five times (in 1969, 1975, 1981, 1993 and 1999) and it was believed that he was not a "man of the people". He turned out to be otherwise when he won a Lok Sabha election for the first time in 2004 from Jangipur, West Bengal.

Even if some have found him to be excruciatingly boring, always politically correct, never speaking a word out of context or letting his guard down even for a moment, Pranab-babu’s qualities are legendary. He has a brain like a computer that never forgets, has an infinite capacity to store and quickly recall information — he remembers names and numbers with unerring accuracy.

No member of the Union council of minister can come anywhere close to matching his administrative experience. He not only knows how the bureaucracy works but also understands the country’s complex political landscape like the back of his hand. Most importantly, he is affable and has friends everywhere — in the Opposition (he was particularly close to the late general secretary of the CPI(M) Harkishan Singh Surjeet) and from the world of business (his proximity to the late Dhirubhai Ambani and his elder son Mukesh Ambani is hardly a secret).

He had fallen out with Rajiv Gandhi for a few years (allegedly because he nurtured prime ministerial ambitions after the assassination of Indira Gandhi in October 1984) but patched up with him before his death in May 1991 — Rajiv Gandhi acknowledged this in one of his last interviews.

Who remembers a political outfit called the Rashtriya Samajwadi Party that was as short-lived as his brief flirtation with freedom outside the banyan tree called the Congress? He is a party loyalist and has almost always been one.

All of that is now history. But the workaholic Pranab-babu has been appointed finance minister for more reasons other than the fact that he had headed dozens of groups of ministers — some say the number was close to 50 — in the first Manmohan Singh government or for his renowned negotiating skills.

He is also holding the post because he represents the centrist space — in terms of economic and political ideology — within the Congress. Just as India’s "grand old party" lurched from the Left (under Indira Gandhi) to the Right (under Dr Singh as finance minister in P.V. Narasimha Rao’s government) and back to the centre, the new finance minister is considered the man for all seasons, who will try and lift the country out of its current economic slowdown.

Reviving the Indian economy is easier said than done and arguably the most challenging task he has faced in his long political career. The worldwide recession is not yet over. At home, industrial growth is sluggish, exports have come down and jobs continue to be lost, especially in labour-intensive industries dependent on Western markets, such as garments and textiles, gems and jewellery, leather and handicrafts.

He will have to balance the aspirations of the upwardly-mobile middle classes with the food and livelihood concerns of at least a quarter of the country’s 1.1 billion people.

In his interim Budget speech, Mr Mukherjee had stated that the government had postponed the fulfilment of the deficit targets specified in the Fiscal Responsibility and Budget Management Act that had become an article of faith of sorts for his predecessor, former finance minister P. Chidambaram.

The fiscal deficit as a proportion of gross domestic product (GDP) for 2008-09 is expected to cross six per cent against the 2.5 per cent budgeted for, with the deficit itself widening more than two-and-a-half times, while the revenue deficit is up from one per cent of GDP budgeted for to 4.4 per cent, the deficit itself going up more than four times. This is hardly surprising since the government’s tax collections are down Rs 62,000 crores, while its total expenditure has exceeded the budget estimate by over Rs 1,50,000 crores.

On February 16, Mr Mukherjee said, "We are going through tough times", adding, "Extraordinary economic circumstances merit extraordinary measures. Now is the time for such measures".

What are these measures going to be? Will he step up spending on welfare schemes by widening the deficit further? Will he divest the government’s holding in select profitable public sector undertakings while retaining its managerial control and if yes, how will he ensure that the funds thus obtained are spent well?

The answers will be known in early-July. The danger is that while trying to please everybody, the finance minister may end up pleasing nobody. It’s not easy to walk the tightrope reconciling the interests of the tycoon with those of the proverbial aam aadmi.

Paranjoy Guha Thakurta is an educator and commentator based in New Delhi