Pranab Mukherjee formally stepped down as finance minister on Tuesday. Given the arithmetic in the electoral college, Mukherjee’s election as the country’s 13th President is a mere formality, so his departure from the cabinet brings to an end a 34-year career in politics. This may be a good moment to review the legacy that Mukherjee has bequeathed to his successor. Late on Tuesday, there were reports that the Prime Minister would take over the portfolio (for now). This is important because, unless drastically reworked, this will dovetail into the legacy of the Congress-led United Progressive Alliance (UPA) that faces general election in less than 24 months.
Mukherjee’s last policy hurrah, in which he promised much over the weekend on behalf of the Reserve Bank of India and failed to deliver on Monday, sums up the substance of his legacy: the inability to walk the talk. Whether it is taming inflation, reviving the growth momentum or initiating a serious fiscal overhaul, the finance minister has failed to deliver on promises. As a result, the macroeconomy that Manmohan Singh will inherit is not a good-looking one. Indeed, suffice to say India is one wrong turn away from a full-blown economic crisis.
Another questionable aspect of Mukherjee’s legacy is the controversial steps initiated with respect to the retrospective amendments to tax laws and the half-baked introduction of the general anti-avoidance rules. Not only has this sent a wrong signal to foreign investors, whom the country needs desperately, it has also set an unfortunate precedent. In fact, Indian industry has also complained, sotto voce of course, about the shakedowns that they have been subjected to by the revenue department in the last few years. In short, the finance ministry has made it less comfortable for businesses to do their business.
Mukherjee can also be accused of not being proactive enough in pushing for a single goods and services tax (GST). It is tragic that the original reformer—most may not remember his contribution in launching path-breaking tax reforms in the 1980s—failed to deliver in his last ministerial stint.
In sum, the finance minister’s record, like that of the UPA, is one of missed opportunities.
Going forward, Singh—and the UPA—has one chance at redemption and that, ironically, lies in working with the opposition. The standing committee on finance, a bipartisan body, has worked out a blueprint for action on legislation to initiate pension and insurance reforms, GST and the direct taxes code. The choice before Mukherjee’s successor is obvious: humility or pride.
Has Pranab Mukherjee done justice to his role as finance minster? Tell us at email@example.com