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 (Photo: HT)
(Photo: HT)

Opinion | A leader who posterity will have much to thank for

Future governments, regardless of political composition, will remember Arun Jaitley’s legacy of economic and legal reforms

Exceptional individuals are rarely uni-dimensional. They cannot be straitjacketed and defined by a single attribute. A student leader imprisoned during the Emergency, member of the Akhil Bharatiya Vidyarthi Parishad (ABVP) and Jan Sangh, one of a young crop of Bharatiya Janata Party (BJP) leaders, successful lawyer, voice of the BJP in opposition, politician, cricket enthusiast and administrator, minister in the A.B. Vajpayee government, member of Parliament and leader of the opposition, minister in the first Narendra Modi government, voice—not just as a spokesperson—of the BJP in the media, consensus builder across political parties, raconteur, blogger, and loyal friend—the late Arun Jaitley was all these and much more. He had been seriously ill.

Since his death, his most defining attribute, projected in the media, has been that of finance minister (FM) in the first Narendra Modi government. Had health permitted, he would have almost certainly continued to be FM.

An FM is a prominent member of the cabinet and has a major role to play in the incumbent government’s decisions, appointments included. One has come to associate big-bang economic reform announcements with the FM. While that’s true, especially for the financial sector, the prime task for any FM is managing the Union government’s annual receipts and expenditure. Receipts can be tax or non-tax—the latter primarily, though not exclusively, equated with disinvestment. In the Vajpayee government, who was minister of state for the newly-formed disinvestment ministry?

The cleaning up of indirect taxes started with Manmohan Singh as FM, but was restricted to import duties. This left domestic indirect taxes, and VAT (value added tax) followed. The next logical step was the GST (goods and services tax), its desirability having been discussed for over a decade. Its implementation was a different matter, since that required a consensus among the states and across parties, within and without Parliament. We can complain about GST implementation, the non-inclusion of all items, its multiplicity of rates and complicated procedures. Indeed, the GST is a work-in-progress. We could have sat around and debated an ideal GST for another couple of decades, or we could have recognized it as a work-in-progress, implemented it, and tweaked it as we went along. That GST was done at all was largely thanks to Arun Jaitley. Given India’s Constitutional structure, this was contingent on the Union and state governments cooperating through the GST Council. This body’s functioning has been a model for Union-state cooperation, with every decision taken through consensus. That it worked was again largely thanks to Arun. With the clean-up of indirect taxes towards an ideal goal, we are left with the revision of direct taxes. The task force on this, which has recently submitted its report on a Direct Tax Code, was set up when Jaitley was FM. This reform involves the elimination of exemptions, mentioned in a Jaitley budget speech. On expenditure, when Jaitley was FM, the Plan versus non-Plan distinction was scrapped, the untied share of states in the divisible pool of taxes increased, following recommendations of the 14th Finance Commission, and there was a new package of central sector and centrally sponsored schemes. There is a continuity of policies between the second Modi government and the first. On revenue and expenditure, current FM Nirmala Sitharaman takes forward the work in progress left by Jaitley. Future governments, regardless of political composition, and posterity, will remember Jaitley’s legacy of these reforms.

But in the first Modi government, he wasn’t only FM. He was also minister for corporate affairs. However defined, reforms are about competition, and this requires ease of both entry and exit, not just the former. The exit of capital and of promoters was less than satisfactory, and there were no decent exit provisions for an unincorporated enterprise. So how can one fail to mention the Insolvency and Bankruptcy Code or the National Company Law Tribunal? During the Modi government’s first term, around 1,600 old and dysfunctional colonial laws were repealed. Who set the precedent, after some minor scrapping in 1961? It was set in 2001-02, when Jaitley was law, justice and company affairs minister in the Vajpayee government. That was also when the Civil Procedure Code (CPC) was amended. Had it not been for a subsequent court judgement, those two CPC amendments would have reduced the average duration of a civil case to about a year and a half.

Trade negotiations can be bilateral, regional or multilateral. Since 1996-99, multilateral negotiations have been stuck. Caricaturing a bit, that’s because countries like India have found a voice, unlike the late 1980s and the early 1990s. This coming of age can be dated to the Doha Ministerial Conference in 2001. It pre-dates Jaitley and the Vajpayee government. However, when full-length obituaries are written, I hope some people remember him as commerce minister in Cancun, Mexico, in 2003.

As I said, Arun Jaitley wasn’t uni-dimensional. I have mostly interacted with him when he was in government, and therefore, I have focused on those aspects. I first met him when he was commerce minister and he had asked me to drop in at the ministry to discuss India’s negotiating position. I found the minister engrossed in a cricket match on television. “Wait," he said, “We have found a new spin bowler. Let him finish his overs."

That was Arun Jaitley. Any author or editor with a new book on the economy will have to think really hard. The default chief guest, for whom no draft speech was ever needed, has departed.

Bibek Debroy is chairman of the Economic Advisory Council to the Prime Minister and a Mint columnist

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