This is the single-most important ministry by which the BJP government is being judged. But the irony is that the Modi sarkar’s most relied upon member, Arun Jaitley, has really been a part-time finance minister for most of the past 200 days. He’s been busy with other ministries and has also had personal health issues, which meant that the time and attention the post requires has been a given. But despite a poor beginning—the first budget was savaged—luck has favoured the finance minister.
Crude oil prices have crashed, handing lower inflation on a platter to the finance minister. This has allowed him to deregulate diesel prices and even reduce the UPA’s earlier increase in domestic gas prices. Economist S.L. Rao is strongly of the view that several of the positives seen in the economy—from easing of inflation to improvement in balance of payment deficit (for a few months) and rise in GDP growth projections—“is not because of actions by Jaitley but because of good luck, especially the dip in crude oil prices”. While Corporate India is breathing easier now, boardroom murmurs are rising. Is the FM moving fast enough to jumpstart investments?
A common perception among experts closely associated with the finance ministry is that it continues to be run by bureaucrats. For example, in the case of GST, the focus is on speeding up the process and letting bureaucrats handle it with no concrete political input. So far, not a single example of political direction has emerged from the ministry on matters that would deliver on the promise of transparency and good governance. “The promise of transparency remains empty words as is the report on black money which has been gathering dust. It has neither been released nor discussed,” states a senior economic advisor.
Despite having a high opinion about Jaitley’s understanding and decision-making powers, he wondered how many of them are being made independently by the minister considering that major directives continue to come from the PMO. “It is difficult to judge the performance of individual ministers when the directives come from the prime minister and his team in the PMO—whether it is on the Planning Commission, DBT (Direct Benefit Transfer) or the GST,” opined another economic adviser to the government.
One of the continuing major failures of the central government remains the inability to reach out to states to co-opt them in support of the reforms. Among the many tasks at hand is to cut fiscal deficit, push through DBT and GST tax reforms and create a conducive atmosphere and policy framework to attract FDI—including realising the promise of investments from Japan and China and helping PSU banks straighten their balance sheets (looming NPAs).
Much more effort will have to be put in by commerce and industry minister Nirmala Sitharaman to give direction to the ‘Made in India’ thrust and to shape up the hundreds of SEZs set up during the UPA tenure which, as the CAG’s recent report reinforced, have failed to deliver despite being given concessions well over what the farmers have received in loan waivers.
While the finance minister has still to deliver on several fronts, there are expectations that with a handpicked team that includes domain experts like MoS for finance Jayant Sinha (a former financial consultant) and eminent economist Arvind Subramanian as CEA, Jaitley will give a clear signal on the direction of the government in the full budget to be presented in February. For now, achche din are still a dream awaiting action.
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