“I know my limitations. I live and work according to my limitations. And my party only two weeks ago has clearly declared that the leader of the party after Ms Sonia Gandhi will be Mr Rahul Gandhi. And all of us, including me, have expressed our solid support to Mr Rahul Gandhi….”
in an interview to Financial Times, London, on January 29, 2013
“And though Sonia Gandhi expects, health permitting, to hold on to backroom power, she needs a partner to front the show. If she trusts him, Mr Chidambaram may fit the bill.…”
December 1, 2012
For some time now, people who interact closely with Palaniappan Chidambaram have sensed a change in the 68-year-old politician. The UPA’s finance minister, they aver, has been trying to shed a well-deserved reputation of being arrogant and dismissive. He has been presenting a softer, more human side at government briefings, smiling more often and flying off the handle less. Why, he even broke into Bhojpuri recently in Parliament. Fittingly, it is a smiling Chidambaram who rejects the buzz around his growing stature within the UPA. “I know that some of you think I am foolish. But I am not so foolish as you think,” he had told reporters asking about him being a potential PM candidate.
It is not only sections of the foreign media who like the sound of technocrat Chidambaram being in the driver’s seat. UPA ally DMK’s M. Karunanidhi recently endorsed actor Kamalahaasan’s demand for a veshti-wearing PM. (It’s a different matter that this upset Tamil Nadu CM Jayalalitha so much that she was quick to ensure that Kamalahaasan’s Vishwaroopam release got stalled for some time). A favourite of India Inc, Chidambaram had emerged as the top choice in a recent Outlook-MDRA poll, wherein 49.9 per cent of the respondents in urban India thought him to be the best bet for the hot seat if Rahul Gandhi didn’t take up the PM’s post in the event of the UPA returning to power for a third time.
Given that his earlier rival—Pranab Mukherjee—has been moved to the Rashtrapati Bhavan, and Rahul Gandhi has thus far expressed reluctance to take up the top job, could this be Chidambaram’s moment? Of course, this is based on many assumptions: that a scam-tainted Congress will be in a position to form a government in 2014; that UPA’s allies will play ball; and that Rahul Gandhi will prefer going in for a technocrat-politician to manage the show. Chidambaram also has many enemies, most of them within the UPA. There have also been controversies around him (like the 2G scam, where the SC gave him a clean chit). Even so, there’s no denying that his name has emerged (with caveats) in the run-up to 2014.
Chidambaram shares one key trait with the bjp’s rising star, Narendra Modi—they are both openly ambitious (“When did self-confidence become a vice?” Chidambaram had asked FT). Like Modi again, Chidambaram is seen as a tough, no-nonsense administrator, with a near-flawless stint as home minister. Chidambaram himself though sees nothing in common with Modi, and even as he quoted the Gujarat CM’s mascot Vivekananda, could not resist taking a dig at Modi in his budget, rejecting the economic model of “states that grow at a fast rate” but leave behind vast numbers of people. Interestingly, Chidambaram’s budget reached out to Bihar’s Nitish Kumar with a change in special status norms.
“Chidambaram’s sending a clear signal (with the budget): the nation’s interests matter more than the UPA’s interest—and that he can stand up to the Modis of the world,” says a source who has known Chidambaram for decades. Given that India Inc and large parts of the middle class have always been partial to Chidambaram as a good economic manager, just how will this budget help his case for the top job? Even though Chidambaram has carefully avoided stepping on the toes of urban tax-payers and businesses—for all the hullaballoo, the tax on the rich has been practically insignificant—there has been mixed reactions from the industry and the markets. The Sensex tanked 290 points, to a three-month low level.
Could that be because many are unsure of how to react to this economic statement? Given the job of talking up an economy under pressure, Chidambaram seems to have balanced his sums while making most pressure groups—particularly those most liable to feel aggrieved by a sense of neglect—feel like they have got something. That’s why someone like @sonaliranade tweeted soon after the budget: “You have just heard the next prime minister lay out his case for the top job.”
“It is a budget with very little increase in taxation,” says Prof G.K. Karanth of the Institute for Social and Economic Change, Bangalore. “It’s a please-all budget to the extent possible (given the fiscal deficit concerns).” In a message “every mother”, “young man and woman” and their families would understand—a triad in which the farmer is conspicuous by his absence—the budget strives to convey that the UPA government is thinking of every section of society in allocating funds. But cleverly, the FM also underscores that the desired outcome can transpire only “through good governance, prudent cash management, close monitoring and timely implementation”.
It is significant that political considerations have ensured a much larger chunk of funds (Rs 6,000 crore) for rural housing in comparison to Rs 2,000 crore for the urban poor, who continue to migrate in large numbers to cities despite MGNREGA and could benefit under a bigger, affordable housing scheme. “There is no message for further growth or for managing inflation or black money,” says T.S.R. Subramaniam, former cabinet secretary. “But what he has probably tried to ensure is that India’s international ratings are not negative.”
Chidambaram has tried to reduce the fiscal and current account deficit in the budget but it is still too early to say what the picture will be nine months from now by which time the government will be ready to go to polls. “While the finance minister has, we believe, presented a prudent budget, the question is whether the numbers are achievable,” says Sonal Varma of Nomura Financial Advisory. There could be many a devil in the fine print. As was discovered in Chidambaram’s earlier tenure as finance minister, he is not above presenting a brighter picture by putting subsidies off the budget.
This time again the subsidy allocation seems to have been underestimated. Though the food ministry has estimated an additional expenditure of Rs 20,000 crore if the proposed national food security legislation is enacted and the scheme rolled out, the finance minister has allocated only Rs 10,000 crore to it. “Chidambaram’s image is that he is not focused on development and the poor,” says NAC member N.C. Saxena.
This may be why neither the industry nor the social sector is very clear on where the government is headed with its “reforms”—fronted by Chidambaram—including the rush to roll out direct cash transfer of pension, scholarships and also subsidies without ensuring the infrastructure to prevent leakages. That said, he elicited some support from Dr M.S. Swaminathan, noted agriculture scientist and Rajya Sabha member, who says Chidambaram’s budget “will be remembered for the importance given to the needs of the economically and socially underprivileged sections of our society”.
In the final analysis, however, the budget numbers do not back up the UPA’s claims of being pro-poor, farmer-friendly, nor even growth-oriented. “The FM and the UPA realise that the government does not have the leeway to keep spending money like before,” says Sudha Pai, professor of political science at JNU. Agrees Rahul Bhasin of Barings, who is among those upset at the budget jugglery, “When incomes, savings, investments as well as taxes are going to be difficult to predict, when growth outlook is uncertain, revenues are under a cloud, how can we throw money around the way the FM has, without a single word on how to improve productivity?”
The answer clearly is that Chidambaram has strived to look beyond numbers to accommodate 10, Janpath’s populist demands, bridging some distance between his political aspirations and those of his party, feels S.L. Rao, former director-general of NCAER. “If he wants the PM’s chair, he needs to appear not too hostile to Sonia Gandhi’s schemes.” Even earlier, during 2008, Chidambaram had striven to build on his political ambitions through the farm loan waiver and MGNREGA to help UPA ride back to power with a bigger mandate.
On the back of such moves, Chidambaram is now the UPA government’s ‘Mr Fix-It’. He has been displaying a strong dose of political malleability of late. For instance, he introduced the direct cash transfer scheme and dropped his opposition to Aadhar once it became clear to him that the Nehru-Gandhi family was fully behind the UID. It’s apparent that Sonai Gandhi trusts Chidambaram, for she elevated him to the home ministry after the Mumbai attack. “He is far more efficient than Sushilkumar Shinde,” says Sudha Pai. “The question does crop up of whether the Hyderabad blasts would have happened if Chidambaram had still been in charge.”
Similarly, it was his rival Pranab Mukherjee who was kicked upstairs last year soon after the infamous bugging episode in the finance ministry offices. Actually, the absence of a political base for Chidambaram (Jayalalitha is apparently working extra hard to ensure that he loses in Sivaganga in 2014) could actually suit the Nehru-Gandhis if they are in search for a Manmohan-like figure for Rahul (who hasn’t clarified his intentions). But while the family did not have a problem nominating Manmohan Singh in 2004, they will find it tougher to convince the party about Chidambaram.
That’s why the instinctive reaction of political sources is that Chidambaram will never be made PM. There are many who admire his abilities but rule him out for the top job, thanks to his abrasive nature. But this might change, given Modi’s rise and the need for a pro-development face to counter it. If Nitish’s initial reaction to the budget is any indicator, Chidambaram has made some headway for a man who is known to not carry his peers along.
“There is really just a handful of people who come to mind who can lead the party as PMs—Chidambaram, Jairam Ramesh and dark horse Prithviraj Chauhan,” says Jayant Sinha of consultancy Omidyar Networks. As for Chidambaram specifically, who knows after the next elections? For now, as Prof C. Lakshmanan of the Madras Institute of Development Studies puts it, the choice is limited: “If compared to Rahul Gandhi, then I would prefer Chidambaram as prime minister.”
What works for Chidambaram
(if Rahul Gandhi isn’t ready)
- Blast-free run as home minister after taking over from Shivraj Patil following 26/11, barring German Bakery
- Painted by rivals as corporate-friendly finance minister; has delayed rival Pranab Mukherjee’s GAAR
- Urban TV-watching middle-class India loves posh English accent and articulation, and signs of a high IQ
- Can match Narendra Modi’s earthy arrogance with a nose-in-Harvard air; has a record to match
- For Sonia and Rahul Gandhi, represents a continuum from the Rajiv Gandhi regime
- Has mellowed in recent months, toned down opposition to UID after Rahul backed direct cash transfer
- ‘Veshti-wearing Tamil’ could fetch seats in South to offset losses in Andhra Pradesh, which contributed most to Congress kitty last time
- Experience across big ministries unlike other potential contenders; eight budgets, including the ‘dream’ one of ’97.
(even if UPA pulls off a third win)
- Unknown in Hindi-speaking ‘Bharat’; MPs see him as “snooty, impatient, argumentative, dismissive”
- Flourishing legal career has potential for conflict of interest; hauled over coals in 2G scam before SC clean chit
- Operation against Naxals may not have left 10, Janpath happy; killing of 76 CRPF jawans blamed on bad handling
- Friendless in Congress; his own 2009 poll ‘win’ by 3,354 votes from Sivaganga has been challenged in court
- DMK won’t let him steal thunder in home state Tamil Nadu; tough stand on ‘Hindutva terror’ is red rag to BJP
- Telangana crisis, which might cost Congress dear, laid squarely at his ‘clueless’ midnight announcement in 2008
- Son Karti features in WikiLeaks admitting to giving “a few sops” to villagers; also under scrutiny in Aircel-Maxis deal
- Seen by “loyal” Congressmen as overambitious; North Block ‘bugging’ episode, rift with Pranab
(How the FM wants to keep all happy)
Aam aadmi More money for education, health; tax credit for LIG Middle class Tax relief for first-time home buyers up to Rs 25 lakh The rich 10% surcharge for earnings over Rs 1 cr, only for a year Rural India Allocation up by nearly 50%, lending made easier Farmers Spend 18% more on agriculture, incentives for loans Corporates, FIIs Soft corner for FDI, incentives for investments Young Scholarships, skill devt schemes aimed at employability Women All-women’s bank, safety fund, up duty-free gold import Party Tight leash on spending while juggling welfare needs Government A balance between fiscal prudence and realpolitik
PC As FM
By Lola Nayar with Arindam Mukherjee, Arti Sharma and Pragya Singh