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Remembering Pranab Mukherjee and his economic legacy

Mukherjee has made India proud by serving at many international forums, such as IMF, World Bank, Asian Development Bank, African Development Bank, and many others through the years

Mudit Kapoorand twitter-logoManali | August 31, 2020 | Updated 18:35 IST
Remembering Pranab Mukherjee and his economic legacy
Mukherjee was also rated as one of the best finance ministers of the world in 1984, according to a survey conducted by "Euro Money" journal

Former President Pranab Mukherjee has donned many hats in his over five-decade-long career. Having served successive governments in myriad capacities, Mukherjee has played a key role in shaping India's economy.

Nicknamed 'Poltu-da', he served two terms as the country's finance minister (FM), 25 years apart, first under the Indira Gandhi government between January 1982 and December 1984, and second under Prime Minister Dr. Manmohan Singh between January 2009 and June 2012. Mukherjee is the only FM to have presented successive budgets in the pre-liberalisation as well as post-liberalisation era.

A trained lawyer with a degree in history and political science, he has straddled several ministries during his career in the corridors of power, spanning external affairs, economic affairs, finance, defence, transport & communications, shipping, commerce & industry, and the erstwhile planning commission.

Pranab Mukherjee as finance minister (2009-12)

The biggest highlight of Mukherjee's tenure was the retrospective tax - a decision he defended arduously in his book that came out in 2017. In the Budget 2012-13, he proposed to amend the Income-Tax Act, 1961 with retrospective effect to tax Vodafone-type deals done overseas involving domestic assets.

The decision was largely campaigned against by the international and domestic industry saying it would hurt foreign investment. While defending his decision in his book, 'The coalition years: 1996 to 2012', Mukherjee said that it was borne out of his "conviction that India's Direct Tax Policy should not discriminate between domestic and foreign entities".

Meanwhile, his proposal to raise the income tax exemption limit for senior citizens by Rs 15,000, for women and others by Rs 10,000 each, while retaining the corporate tax rate in the 2009-10 budget, was well-received by analysts.

In the same budget, Mukherjee repealed the commodity transaction tax and fringe benefit tax, which was also welcomed by economists and analysts at large. Under the Manmohan Singh government, he expanded funding for social sector schemes, like NREGA, girl's literacy, and healthcare. Mukherjee also widened the net of infrastructure programmes like electricity coverage, and Jawaharlal Nehru National Urban Renewal Mission.

In 2010, he was awarded "Finance Minister of the Year for Asia" by London-based newspaper Emerging Markets for taking significant steps to reduce the budget deficit, in a year of global crisis.

Shortly before tendering his resignation as finance minister, ahead of 2012 Presidential polls, Mukherjee raised concerns over inflationary pressures (in the economy) and sharp depreciation in rupee.

Pranab Mukherjee as finance minister (1982-84)

His stint as India's finance minister under the Indira Gandhi regime (pre-liberalisation era), won him many accolades for paying back the International Monetary Fund's (IMF) loans. Under his stewardship, India earned the distinction of not withdrawing the last installment of IMF loan worth $1.1 billion.

In the 70s and 80s, he played a key role in setting up regional rural banks (1975), the EXIM Bank of India, and National Bank for Agriculture and Rural Development (1981-82).

Mukherjee was also rated as one of the best finance ministers of the world in 1984, according to a survey conducted by "Euro Money" journal.

He is also attributed to as the architect of the Direct Tax Code, which did not get implemented at that time.

Mukherjee, under the code, suggested superseding the Income Tax Act with an aim to broaden the income tax base. He also proposed raising the exemption limit and bringing about some changes to the tax slabs.

In what came to be known as the Gadgil-Mukherjee formula, Mukherjee came up with a modified formula for resource sharing between the Centre and the states in 1991.

Mukherjee has also made India proud by serving at many international forums, such as IMF, World Bank, Asian Development Bank, African Development Bank, and many others through the years. He served on the Board of Governors of:

  • The International Monetary Fund (1982 -1985 and 2009-2012)
  • The World Bank (1982 - 1985) and (2009-2012)
  • Asian Development Bank (1982 - 1985) and (2009-2012)
  • African Development Bank (1982-1985) and (2009-2012)
  • Chairman, Group of 24 nations in IMF and World Bank - (1984 and 2011-12)
  • Presided over SAARC, Council of Ministers Conference, May 1995, November 1995 and April 2007

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