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| Feb 28, 2000 | ||
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| FINANCE MINISTER From Zero to Hero From a compromise finance minister in 1998, Sinha has emerged as one of the most formidable occupants of North Block. That bodes well for Budget 2000. By Rohit Saran
In some sections of North Block -- which houses India's all-powerful Finance Ministry -- a simple phrase is doing the rounds to describe the rise and rise of Yashwant Sinha: from zero to hero. It's difficult to disagree. Of the 23 finance ministers India has had so far, Sinha will soon join a hallowed group of five who have presented five or more Union budgets (two interim and three regular in his case). That's no mean achievement for a man who joined the BJP only in 1994, as opposed to most other BJP ministers who have been with the party for decades. Sinha's achievements are not merely statistical. Many economists believe that he is presiding over the best "pre-budget" economy in recent years. The industry is on a rebound, inflation rate is negligible, exports have recovered and business sentiments are improving each day. This is best reflected in the stock markets which have been on a record- breaking spree for about three months now. Cynics would credit Sinha's luck more than his deeds. The economy, they say, had to turn around from a three-year downswing. After all much of the impressive economic performance today (see graphic) could be just an adjustment of the poor showing in the past years when inflation was in double digits and exports and industrial production were stagnant. Moreover, Sinha is also the beneficiary of the widest-ever political consensus on economic reforms. Evidence: passage of long-pending legislations like the Insurance Regulatory Authority Bill and the Foreign Exchange Management Act in December last year. The finance minister also enjoys the unqualified support of industry. In fact, it was industry that rooted for Sinha's reappointment as finance minister in October 1999. But it is not out of nothing that circumstances have turned to Sinha's favour. He too has worked hard to turn the tables. Above all, he has been a keen on-the-job learner. "In the first few months most proposals needed to be explained at length to the minister. But by now he is as knowledgeable on matters of finance as his two predecessors, and often lends his insights into plans," says a Finance Ministry official who has also worked with Sinha's two formidable predecessors, Manmohan Singh and P. Chidambaram. Confirms Sunil Bhandare, adviser with Tata Services: "Sinha's grasp on matters of finance and industry has been quick and firm." It is this learning that ensured his leap from a disastrous "roll-back" budget of June 1998 to a growth-enabling budget of February 1999. Sinha has also been swift to make the most of circumstances. Evidence: a 40 per cent increase in diesel prices in October 1999 and a slew of legislative reforms in December. Admits Jagdish Shettigar, head of the BJP's Economic Cell: "Sinha is one of the performing ministers in the government. That has strengthened his position and lent him confidence." What does a confident Sinha mean for the forthcoming budget? Will his elevated stature mean a bold and pragmatic Budget 2000? Many observers feel so. Says Shashank Bhide, chief economist at the National Council of Applied Economic Research: "There are reasons to expect the finance minister to have more flexibility in making this year's budget than in the past few years." Part of the flexibility also stems from the doings and wrong-doings of the past finance ministers. Tax reductions and reforms of the past years mean that there aren't many lobbies seeking tax cuts and concessions. Implementation of doles like the Fifth Pay Commission means fewer demands for wage hikes. "This time the mood of both the industry and individuals is different," says Bhandare. "They are not expecting concessions and giveaways. Instead, they are hoping for bold, prudent steps." These sobering expectations have also to do with Sinha's recent assertions that his budget will be full of hard measures. Shettigar is sure of cuts in subsidies on fertiliser and food. "By doing so we will make people less dependent on the government," he quips. In fact, the Petroleum Ministry is keen to cut subsidies on cooking gas (LPG) and diesel even before the budget. The trigger: the recent spurt in global crude oil prices to an eight-year high of $30 a barrel. Economists are also betting on the introduction of a fiscal responsibility bill which will aim at capping government borrowings. The long-pending expenditure reforms commission is also on the cards. Both were proposed by Sinha in last year's budget. A bold and comprehensive blueprint for privatisation of public-sector units is also certain. In a way, Sinha has no option but to be bold. About two-thirds of the total expenditure of the Government is fixed. This constitutes salaries, interest payments, defence spending and pensions. Of these, defence spending is estimated to go up by Rs 5,000 crore. Remarks B.B. Bhattacharya, professor at the Institute of Economic Growth: "It's a mix of compulsions and discretion that will determine how bold Sinha can be in the budget." To know how judicious that mix will be, wait till 10 a.m. on February 29. |
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