Well-meaning, earnest, reticent, persistent, sometimes dogged, babuish, not exactly a hit with the PM, even less so with the mandarins in the pmo. Yashwant Sinha has been described variously but never once as somebody who has the potential to set North Block afire. A fact that A.B. Vajpayee was aware of when he grudgingly agreed to put him in charge of the crucial finance portfolio in 1998 as well as 1999.
A fact that bobs up whenever the economy gets into a tangle, business confidence dips, stockmarkets go into a depression, the rupee languishes. Of late, this is happening ever so often. Resulting in the capital's imaginative gossips chalking out a seemingly foolproof plan of Sinha's bidding goodbye to North Block and taking over the reins of Jharkhand.
Whether Sinha's political banishment is imminent or necessary is a different story altogether—after all, the nda doesn't always present a very consistent face. But why must the finance minister be the single repository of general ill-will for whatever that happens or does not happen to the economy? It's a question Sinha must be asking himself a lot these days. As does a financial analyst. "It's his job to look at the government's finances. For how long should the Indian public pay for the inefficiencies of the government?" asks Anand Tandon, research director in ask Raymond-James, an fii brokerage. Or Mani Shankar Aiyar, Congressman: "With the latest estimates for this year, the average gdp growth rate in the '90s has turned out the same as in the '80s. Is Mr Sinha taking us into the 21st century on the path of stagnation? He has failed on all counts. How the PM can still retain him beats me." Or economist-journalist Ashok Desai at his cattiest: "Whatever his personal propensities might be, he hasn't been able to push through his agenda. He makes beautiful noises but his policies do not reflect his fine sentiments."
Take away the fervour from these comments and a logic emerges. There are clear signs that the economy may be getting ready for a snooze. Definitely not the other way round as Sinha seemed to suggest in a recent interview: "The feeling of slowdown has been created by four factors—rupee depreciation, weak monsoon, tech stock collapse and oil price rise."
If Sinha has a strategy up his sleeve to tackle the slowdown, he's not telling yet. But then that's his style. At the Economic Editors' Conference in October, he and his team were stoutly defending their work as well as the fate of the economy this fiscal. Barely a month later, he concedes that a 5.9 per cent may be our best hope for the current year.
And it's not the first show of bravado by the bureaucrat-turned-minister. Sinha has followed this up by saying that he knew all along about the secretarial reshuffle in his ministry, that despite economic affairs secretary E.A.S. Sarma being "an outstanding officer and a valued colleague", he had to go as economic affairs and the portfolio of finance secretary could not be entrusted to two different people. But Sinha hasn't divulged why he wanted former defence secretary Ajit Kumar as his man to prepare the budget four months before the big event.
The musical chairs in the key economic ministries hasn't gone down well at all with analysts and the media. Especially with Kumar, a man with little experience in economic ministries, taking over the all-important job of the finance secretary along with economic affairs. But, says a reputed economist who advises the finance ministry, "Sinha was fully aware of the reshuffle. He wanted a new team and I'm confident he's going to push through all the reforms necessary. In this, he has the full support of the pmo. Right now, the state of the economy has nothing much to do with the finance ministry's performance. Even in pending reforms like disinvestment, the ball is now in other ministries, in power reforms, it's with the states, and in expenditure reform, the entire government must agree to what the finance ministry wants."
But others are not so kind. Says Aiyar: "Even after 10 years, we still don't have a white paper on disinvestment. All we have is targets, no concrete plan." Agrees Tandon: "If you're selling assets to finance expenditure, then your finances will be in a mess. Sooner or later you won't have these silver heirlooms to sell, then what do you do?" A moot point, as the borrowings limit will soon be breached, whether or not the government puts a cap on it. Says Sekhar Sathe, ceo, Kotak Mahindra Finance: "The money garnered through the India Millennium Deposits will go to meet the government's revenue expenditure. We are borrowing to eat, not to produce.
Why can't there be a vrs in the government?"
Forget infrastructure—which power project can take off unless the state power boards turn solvent and capable of buying it? Or disinvestment—the Cabinet Committee on Disinvestment could not meet on November 10 as scheduled to discuss the privatisation of mtnl, vsnl and Maruti as communications minister Ram Vilas Paswan was away. And the most important reason why Sinha has ceased to be a darling of the masses and the classes is because of the dual-edged sword called cost-cutting and downsizing. Says Tandon: "Sinha's single-point agenda should be to cut government size. If he shuts down one ministry, the market will zoom 1,000 points. And he has to take the lead." Agrees R. Sankaran, chairman, Ind Global Financial Trust: "The total wage bill of the bureaucracy is around Rs 70,000 crore. If he can cut that, he'd be doing enough."
Will he? More importantly, can he? Sinha may be well-intentioned but neither does he seem to have the persuasive powers of Manmohan Singh when getting other ministers to toe the line nor does he have his PM's backing the way Manmohan had. Take the Fiscal Responsibility Bill. Insiders hope that the Bill will surface in the winter session, but... That's because cost-cutting hits the entire administrative system and its leaders, a system that thrives on applying and bestowing privileges. It's the last thing that an ailing prime minister, cagey about his own leadership status within the party, wants right now.
Insiders say that Vajpayee, aware of the ground realities, has started to fall back on his most trusted ally in the government, external affairs minister Jaswant Singh, for everything, even in cabinet meetings, be it for an explanation on the oil price roll-back to Mamata Banerjee or to food minister Shanta Kumar for ways to dispose of excess grain stocks. This, when Sinha was present and obviously more equipped to answer such questions. They also say that Vajpayee has been especially troubled by Sinha's firm refusal to accede to a duty revision on petroproducts to petroleum minister Ram Naik, leading to serious angst among allies and Naik's wish to step down.
Clearly, despite his public stance, Sinha is worried on the budget front. But can he withstand the pressure from the pmo, even with his new able secretary? Unfortunately, there have been few such precedents. According to Desai, "Certain powers-that-be in the pmo have successfully undermined the ministry's authority.Add to it his propensity to defer to the bjp top brass."
One of the important recommendations of the expenditure commission is to cut 10 per cent of government jobs. That means about one lakh jobs a year. An unenviable situation where Sinha, already perceived by Vajpayee as his competitor's mole in his team, has to take sole responsibility in the same way as during the Mauritius tax controversy or the rupee's slide to 46. If Sinha tries to cut jobs, bureaucrats and nda allies will be up in arms. If he bows to pressure, analysts and stockmarkets will condemn him. Other ministries go slow on reforms or blow up cash and Sinha somehow gets the blame. Add to that a PM who doesn't seem to particularly trust him. Right now, as the countdown to Parliament's winter session begins, Sinha is at the most critical point of his thankless job.
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