On Monday, P Chidambaram will present his fourth Budget. While he remains unflinchingly correct in his dealings, the finance minister has changed in the way he now manages his ministry.
It was 8.00 am on Thursday, 20 May, 2004 when P Chidambaram walked into 19 Safdarjung Road, the residence of Dr Manmohan Singh, to offer him his congratulations and a red brocade shawl.
The previous afternoon, Dr Manmohan Singh had met President A P J Abdul Kalam and was declared Prime Minister-designate. This had quietened a jittery stock market but it was Congressmen who were suffering from the heeby-jeebies now.
Speculation had begun on the council of ministers. A Congress general secretary considered close to Congress President Sonia Gandhi said with an air of confidence that she didn't think P Chidambaram was getting a ministership.
"After all, he's only just returned to the Congress," she said. Another general secretary saw his number flashing on his mobile and switched it off.
As he entered the corridor that led to Singh's library and was ushered in, Chidambaram had no idea he would soon be occupying the same house, and certainly didn't know it would be as finance minister.
The following evening, he received calls from news networks about his appointment. He had a stock answer: "I don't know. I'm having fried chicken for dinner and then I'm going to bed. Let's see what happens tomorrow."
On Saturday, 22 May, he took the oath as finance minister for the fourth time. As before, he took the oath in the name of the constitution (not god) and got down to work on a budget he was required to present in the next six weeks.
Budget-making in double-quick time was nothing new for a man who had rewritten India's Exim Policy in 1991 in a matter of 12 hours. But the context had changed. And so had Chidambaram.
The old Chidambaram had no time for dogma and was especially scornful of Left rhetoric. He believed the underdog only represented a set of vested interest that wanted to keep society and economy in perpetually backward mode and therefore, in its thrall.
The new Chidambaram, having managed several coalitions partnered by the BJP and the Left, is more receptive to socialist anxieties. In 1991, when he became commerce minister, you would never have heard him talking about microcredit, let alone self help groups (SHGs).
Then, the preoccupation was with corporatisation and the principles of economies of scale. Today, not only has his constituency, Sivaganga, seen a mushrooming of SHGs, he himself visits microcredit facilities when he can to understand the problems of very small businesses.
At Citibank's microfinance awards earlier this year, he explained that he had been travelling to understand microfinance and the gaps in the delivery mechanism.
"I went to see a branch of a bank recently. Because I was present, the manager of the bank forwarded Rs 1,000 as credit to a man who had come seeking a loan. It was more a dole than a loan. That is precisely what is wrong with delivery systems. When the poor get credit, it is treated as a favour. There is no viable credit mechanism," he said.
These would not have been the preoccupations of the old Chidambaram.
That he attended a meeting organised by the Self Employed Women's Association (SEWA) in January was in itself a surprise.
And when SEWA said it wanted banks to recognise its SHGs as viable businesses, and when they didn't it wanted recourse to a regulator who could address their complaints, Chidambaram told them that they did not know it but they could be creating a monster.
"A regulator is not part of the solution, he is part of the problem," he said. The finance ministry is now expending a lot of energy in trying to professionalise the microfinance sector.
There is a palpable change in his approach, especially in dealings with the Left. He is trying to concentrate on what is achievable, and putting aside to resolve at a later date what is not.
Whether it is FDI in telecom or banking, Chidambaram's approach is to chip away at resistance, eliminating the fog of value-loaded arguments and replacing them with sheer economic logic.
CPIM's Prakash Karat considers Chidambaram a formidable negotiator because you can't fault his economics even if you don't agree with him.
There's one thing that hasn't changed about Chidambaram -- and that is a stout resistance to using the law for political advantage. In his book, this classifies as a sharp practice.
Tamil Nadu Chief Minister Jayalalithaa is a vulnerable target for cases relating to assets disproportionate to her income. Indeed, Chidambaram has himself spoken and written -- when he was out of office -- about these cases.
As finance minister he is privy to mindboggling amounts of information. So far, there's been no attempt by him to institute new cases or speed up old ones.
They are not friends, Jayalalithaa and he. In 1992-93, ADMK workers firebombed his car , shattering the windows. Chidambaram sat down on a dharna in the middle of the road and refused to move until the district administration had taken cognizance of the attack.
He was a Union minister then. Now, Jayalalithaa is keeping a wary distance. His DMK partners can't understand why he doesn't intervene, involve Jayalalithaa in a thousand legal cases and remove a political problem through legal means.
Well, that won't happen because Chidambaram is Chidambaram.
His recent political adventures -- moving out of the Congress banyan tree to launch the Tamil Maanila Congress (TMC), the electoral debacle of the TMC, mentor G K Moopanar's death and the formation of the miniscule Congress Jananayaka Pervai, and the subsequent return to the Congress -- have reinforced what everyone knew: that Chidambaram has never been wanting in courage.
Because he is brave, he expects everyone else to be too, and is always slightly disappointed when people take easier ways out. When he is curt or abrupt, it is his disappointment speaking.
Wherever he has been, the locus of his relationship with the Congress has not altered. It was he and his wife who, after Rajiv Gandhi's assassination, fought cases for Gandhi's possessions -- the clothes he was wearing , his shoes etc -- to be restored to Sonia Gandhi. That meant a lot to Gandhi's widow.
Now, when professional competence is at a premium in the Congress, Chidambaram is one of the most valued lieutenants of the UPA team. So when you hear rumours of a reshuffle and a replacement in the finance ministry, don't believe a word. He isn't going anywhere.
He is valuable for another reason. Every public sector bank chairman would have, in the course of his career as chairman, got letters from various industrialists, forwarded by the finance minister's office, seeking rescheduling of loans.
Some finance ministers even dispensed with the formality of writing covering letters, simply making notings on the petitions themselves and passing them on.
A dipstick survey reveals this FM's office simply doesn't send such notes. In a ministry where temptations are thick on the ground, incorruptibility is crucial. He continues to believe that money should be one's servant, not one's master.
Chidambaram is full of dreams for young people and a new India. Budget 2005-06 is likely to be a product of Hobbesian chains in which he is bound. Once he is unbound, travels with Chidambaram will be voyages of discovery. Get your tickets -- and your insurance -- now!
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His budgets at a glance
Palaniappan Chidambaram seems to have a special fondness for the number seven. In his first Budget speech on July 22, 1996, as the finance minister in the United Front government, he listed seven broad objectives of his fiscal proposals.
Eight years later, he delivered his third Budget speech on July 8, 2004, as the finance minister in the United Progressive Alliance government, listing seven economic objectives.
The pursuit of a common minimum programme is another common factor in Chidambaram's budgets -- a pointer that Chidambaram has always been FM in a coalition government.
TAX BREAKS
Chidambaram's budgets will be remembered for their steep cuts in direct taxes. In 1997, he reduced individual income-tax rates to three slabs of 10, 20 and 30 per cent, even though he introduced compulsory filing of returns by some categories of individuals.
Similarly, he cut the corporation tax rate to 35 per cent. Successive finance ministers have stuck to these basic rates, making only marginal changes here and there.
He is the author of the unpopular minimum alternate tax, through which he brought under the tax net several companies that were earlier paying no taxes by using various exemption routes.
Chidambaram will also be remembered for introducing the controversial amnesty scheme for those who wanted to disclose their past, unaccounted income and pay tax. The government mopped up additional tax revenue, but the scheme came in for general criticism.
COMMITTEE MAN
In his three budgets so far, Chidambaram succeeded in setting up four new committees -- the Disinvestment Commission, Tariff Commission, Foreign Investment Promotion Council and the Board for Reconstruction of Public Sector Enterprises.
What he could not set up was the proposed expenditure management and administration reforms commission.
Chidambaram set up the Infrastructure Development Finance Company, an organisation to provide funds to the infrastructure sector.
He introduced the idea of imparting greater autonomy to the public sector by declaring nine PSUs as Navaratnas. It is a different matter that two of them were later privatised by the BJP-led coalition government.
Of far-reaching significance were his decisions on phasing out completely the system of the Reserve Bank of India issuing ad-hoc treasury bills to finance budget deficits, permitting Indian companies to buy back their shares from the market, abolishing the tax on dividends in the hands of the shareholder, replacing FERA with the Foreign Exchange Management Act and the limited opening of the insurance sector.
Chidambaram has another fondness: Saint Thiruvalluvar. All his budget speeches have a quote or two from his writings.
- A K Bhattacharya |
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His legal cases
Chidambaram's reputation as a lawyer is well known. He has appeared in cases to defend corporates ranging from Coke and Pepsi to the Birla group and most telecom players, but also appeared against the Tamil Nadu government in the case relating to the mass termination of its employees services by Chief Minister J Jayalalithaa.
He is rated one of the best senior lawyers in the Supreme Court. His son Karti studied law but does not practice it because the shoes are too big to fit into.
Law students in Chennai crowd the High Court when they know Chidambaram is appearing there, which is not that often. |
