It
is a sad, ironic - and surprisingly little noticed -
fact that when a Finance Minister of a developing country
gets recognized as "Best Finance Minister"
by some international media outlet or a similar agency,
within a few years that country has a financial crisis.
This is obviously not intentional – it is much more
a reflection of the shallowness of such judgments. These
tend to be based not on any really solid evaluation,
but more simplistically on the temporary so-called "fundamentals"
of a country that is experiencing a boom, for which
the Finance Minister concerned gets the credit. And
since booms are usually followed by busts, or at the
very least slowdowns, it may even not be so surprising
that the crisis follows, though what is still surprising
is the perennial ability of those making such awards
not to acknowledge this clearly repetitive pattern.
As it happens, Pranab Mukherjee was awarded two such
prizes in 2010. He was chosen as the "Finance Minister
of the Year for Asia" by Emerging Markets, the
equivalent of a daily newspaper for the World Bank and
the IMF. And in December 2010 The Banker magazine recognised
him as "Finance Minister of the Year", ostensibly
because of his efforts at fiscal deficit reduction and
success at maintaining relatively high growth of the
Indian economy in what was seen to be a turbulent year
globally.
Those awards given two years ago would make the timing
about right for the Indian economy to be on the threshold
of a potential crisis. And in fact, this does seem to
be more and more on the cards – if not a crisis, at
least a significant slowdown, which is indeed already
underway as Mr Mukherjee steps down from his office
to pursue the goal of becoming India’s President. Sadly,
Mr Mukherjee appears to have outlived his welcome as
India’s Finance Minister, even among the corporate lobbies
that he earlier seemed to be so much in tune with. Today,
as India’s growth story seems to be petering out, with
decelerating growth, rising prices of essential goods
and stagnant employment along with high youth unemployment
all jostling for public attention, it is much less likely
that Mr Mukherjee would receive any awards for his management
of the economy.
This was his second time in this particular job – Pranab
Mukherjee was also Finance Minister in the Congress
government of the early 1980s. At that time, he was
seen as a safe pair of hands. However, then and subsequently,
there were accusations that he had favoured one particular
business group (Reliance) through influencing differential
tax rates in petrochemicals and textiles, which greatly
benefited the company and adversely affected one of
its main rivals.
Most of the media judgment on Mukherjee’s latest tenure
as Finance Minister has thus far focussed on the more
obvious concerns of corporate India – the slowing rates
of GDP growth and investment, the stagnation of industry
and decline in infrastructure sectors, the burgeoning
balance of payments deficit. He is seen as presiding
over a slowdown that he has been unable to stop. He
is also criticised for making things worse by measures
such as the retrospective tax law, which was actually
a perfectly justified attempt to prevent a complete
violation of the spirit of the laws of the land by multinational
companies using offshore transactions as a means of
tax evasion.
However, these are actually the less problematic aspects
of his record. The bigger concerns relate to acts of
omission and commission that are associated with the
very strategy of economic growth: the continuing neglect
of productive employment generation as the most important
macroeconomic goal; the failure to address the issue
of price rise, and even the cynical accentuation of
that price rise through the strategy of increasing prices
of the most essential intermediate – fuel; the lack
of effort to ensure enough public resources for the
most basic of infrastructure and public services that
affect the lives of most people in the country; the
inadequate efforts to deal with growing food insecurity;
the continuing attempts at further financial liberalisation
on the sly; and the underlying presumption in all of
this that GDP growth led by large private corporate
investment driven by ever-increasing profits is the
only mode of development and really all that the Finance
Ministry needs to be concerned about.
It is this strategy that has generated the pattern of
uneven development that is now unravelling. The past
boom was based on an unsustainable bubble, but even
in the period of high growth the conditions of the bulk
of the population hardly improved, largely because of
the poor employment generation, inadequate attention
to agriculture and nutrition security and terrible provision
of public services.
Obviously, Mr Mukherjee cannot be held solely responsible
for all of these issues, nor for the current state of
economic affairs in general. He is but one (and that
too, relatively recent) part of the now fairly long
list of policy players who have chosen this route for
the Indian economy. But it can certainly be said of
him that he did little or nothing to ameliorate any
of these problems and in some cases exacerbated them.
Certainly, both for his own sake and for the sake of
the country, it is to be hoped that his career as President
of the Republic will be more successful.
*
This article was originally published in Sify.com
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