Word from Raisina Hill is that babus are shuffling into the Home Ministry three hours sooner than they were till December 1. The new Home Minister, P. Chidambaram, is a workaholic. For the hapless bureaucrats, many in Chidambaram’s former team in the finance ministry recommend stocking hordes of domain knowledge, common sense and smelling salts! In the finance ministry, Chidambaram was tough, though not unpopular. Outside of it, he was unpopular, though not tough.Much of the unpopularity comes from his arrogance and an acute impatience with the unintelligent or uninformed. That would be majority of Indians. He would walk out of live TV interviews if the questioner faulted on facts.
Quite like Arun Shourie, the Disinvestment Minister in the NDA government, Chidambaram expects everyone, including detractors, to accept his logic and sincerity. Unlike Shourie, though, he lacked the strong support of the Prime Minister—support to push reforms that are needed but unpopular. One example is raising the FDI cap in insurance to 49 per cent that he proposed in the 2004-05 Budget. What didn’t help is also the fact that he became the face of the government even on matters unconcerned with his ministry. If food prices ran up, he was questioned more than Food Minister Sharad Pawar.
Yet, there is an overbearing feeling even among his admirers that he didn’t persevere to win good will or make friends, if not for personal benefit than for the sake of the reforms. Wherever his reforms agenda required the concurrence of varying interests even in his own party—not to talk of the Opposition or the Left—Chidambaram didn’t push through. He didn’t meet the Left leaders even once for the much-needed banking or pension reforms, except in the Parliamentary committee meetings. The Congress Working Committee went ballistic over his proposals for minor doses of divestments.Where he was the boss, reforms moved on unimpeded. Tax revenues more than doubled, lifting the tax to GDP ratio to 13 per cent from 9.2 per cent in 2004-05. Chidambaram’s job was also to find the funds for the UPA’s Aam Aadmi agenda, which he did well. Spending the money he raised was the job of his Cabinet colleagues.
They happily got fund allocations from him, but floundered in taking the money to the Aam Aadmi. Even after spending Rs 225,000 crore on poverty alleviation that Chidambaram painstakingly collected from taxpayers, the UPA faltered on the goals. The taxpayers’ annoyance was directed at him, because for them the collector of money should be the one responsible for the delivery of services.
As a columnist, he had lashed out in 2003-04 at the NDA’s Budget: “Mr. (Jaswant) Singh does not realise that central government expenditure is a bottomless pit.” He didn’t mince his words with state chief ministers at a National Development Council meeting in December 2007: “It is taking Rs 3.65 to transfer a rupee of benefits to the poor. Without efficiencies, the Public Distribution System could become an albatross around our neck.”
Though he didn’t have the powers to plug the punctured delivery systems, Chidambaram did well to control the release of funds, which kept the Centre’s plan expenditure within budget for four years. And if this year, the government has spent more than Chidambaram’s budget, it is because he couldn’t dissuade the UPA to veto Rahul Gandhi’s call for going pan-India with the National Rural Employment Guarantee Scheme. The scheme spent unexpectedly high amounts this year, which along with the mounting fuel subsidy tab, breached the deficit target.
The jury is still out on whether it was a bad call or arrogance that put him in conflict with the Reserve Bank of India in the growth-versus-inflation debate that raged at the beginning of 2008. The head-strong, conservative Governor, Y.V. Reddy, who enjoyed a direct line to the Prime Minister discounted Chidambaram repeatedly and ultimately proved to be the one to have got it right.
Had Chidambaram not erred in his assessment of the various global economic shocks this year, the Indian economy might have been better prepared and in better shape today. Fortunately for him, being in the Home Ministry will give him a chance for redemption. Right now, the fortune of the economy is more strongly linked to national security than ever. Other than liquidity, security is what Indian business is looking for most. If he can deliver that to India Inc.even in the limited time available to him, people will go back to referring to him as the man who delivered the dream budget, that too in a coalition government.