NEW DELHI, July 24:
Pranab Mukherjee strode like colossus in his journey to the Raisina Hills and left an indelible mark on the economy in his tenures as Finance Minister of the country.
His skills were in abundant display while handling the economy right from his initial days in the Cabinet of then Prime Minister Indira Gandhi and became more marked as he matured in politics. His political acumen, sagacity and vision were for all to see.
He begins his new innings in Rashtrapati Bhawan tomorrow.
Mr Mukherjee’s last tenure as a Finance Minister was geared to protect the economy, first from 2008 global slowdown and later from the eurozone crisis and the West Asia turmoil. His budgets not just reflected this inclination but also he pursued fiscal policies in that direction.
When the global financial crisis struck debilitating almost every country, Mr Mukherjee offered fiscal packages, including a reduction in domestic duties as prescribed by the G20.
He succeeded to a great extent in protecting the growth rate, which fall down from 10 to 6 per cent. An important reason for this was the huge domestic economy and its limited integration with the global economy.
India successfully weathered the global storm, though its exports and some other external parametres did take a limited hit.
The stock markets too went down with many foreign institutional investors leaving the shores of India.
Yet the growth rate remained robust enough to attract foreigners who were convinced that India was a land for long term investments.
Just as the global economy was recovering, the eurozone crisis erupted, choking the emerging economies as well. The liberal monetary policy all along did help the economy from recovering.
However, the devil of inflation hovered in double digits for a long time posing a major challenge for the Finance Minister. The contradiction was that to bring down the fires of inflation has to be done through contractionary policies—restricting money supply and cutting fiscal deficit.
In fact, the RBI raised the basic rates 13 times—the repo rate and the reverse repo rate—and used other means of restricting money supply. This was too harsh for the industry as its growth had touched a new low.
With inflation rate coming down to a single digit, the industry
is now expecting the RBI to move in the reverse direction of contractionary policies. The patchy monsoons have again raised the fears of price rise beyond controllable levels.
UPA’s Man Friday is sometimes criticised for being slow on reforms, although the global situation and the compulsions of a coalition came in the way.
Yet he was drawing consensus on introduction of Goods and Services Tax (GST) and when implemented it will be the biggest tax reform that India has seen. Another taxation reforms he was working was Direct Tax Code (DTC), the much favoured move by the industry.
After AICC chairperson Sonia Gandhi reluctantly agreed to join politics, Mr Mukherjee was one of her key mentors, guiding her through difficult situations with examples of how her mother-in-law, Indira Gandhi would have done things. Mr Mukherjee’s unfailing loyalty and competence have led to his closeness to Ms Gandhi and Prime Minister Manmohan Singh, and helped him gain the position of Minister of Defence when the party came to power in 2004.
He has also held the positions such as Deputy Chairman, Planning Commission from 1991 to 1996. His talents were on display during the negotiations for the Patent Amendment Bill in early 2005. The Congress was committed to passing an IP bill, but their allies in the United Progressive Alliance from the Left front had a long tradition of opposing some of the monopoly aspects of intellectual property.
Mr Mukherjee as a Defence Minister was not formally involved but was roped in for his negotiation skills. He drew on many old alliances, including the CPI-M leader Jyoti Basu, and formed new intermediary positions, which included product patent and little else. Then he had to convince his own colleagues, including Commerce Minister Kamal Nath, at one point saying, “An imperfect legislation is better than no legislation.”
Finally, the bill was approved on March 23, 2005. Among Mr Mukherjee’s current legacy was the successful signing of the US-India Civil Nuclear Agreement with the US government and then with the Nuclear Suppliers Group, allowing India to participate in civilian nuclear trade despite the country not signing the Nuclear Non-Proliferation Treaty.
Mr Mukherjee has received several accolades and honours. In 1984, he was rated as the best Finance Minister in the World according to a survey of Euromoney magazine.
In 2010, he was awarded ‘Finance Minister of the Year for Asia’ by Emerging Markets, the daily newspaper of record for the World Bank and the IMF. In December 2010, The Banker recognised him as the ‘Finance Minister of the Year.’
He was decorated with the Padma Vibhushan, the country’s second highest civilian honour in 2007.
Mr Mukherjee’s first stint as the Finance Minister of India was during the Indira Gandhi government in 1982. He presented his first annual budget in 1982-83.
Mr Mukherjee’s first term was noted for his work in improving the finances of the Government and for successfully returning the last instalment of India’s first IMF loan.
Mr Mukherjee signed the letter of appointment of Dr Singh as the Governor of the Reserve Bank of India in 1982. He was criticised for his supposed links with industralists like late Dhirubhai Ambani.
Mr Mukherjee was removed from his position as Finance Minister by then Prime Minister Rajiv Gandhi in 1984. He had wished to bring Mr Mukherjee in his own team of staff to govern India.
Mr Mukherjee returned to handling the finance of India during the premiership of Narasimha Rao. He was appointed the Deputy Chairman of the Planning Commission. Since the Prime Minister of India happens to be the ex-officio chairperson of Planning Commission of India, the position of the deputy chairperson has great significance. During Mr Mukherjee’s tenure 1991-96, Dr Singh as Finance Minister oversaw many economic reforms to end the Licence Raj system and help open the Indian economy.
Mr Mukherjee again became the Finance Minister of India in 2009. He presented the annual budgets in 2009, 2010 and 2011. The 2010-11 budget included the country’s first explicit target to cut public debt as a proportion of GDP and Mukherjee had targeted a budget deficit reduction to 4.1 per cent of GDP in fiscal year 2012-13, from 6.5 per cent in 2008-09.\Mr Mukherjee implemented many tax reforms. He scrapped the Fringe Benefits Tax and the Commodities Transaction Tax. He implemented the Goods and Services Tax during his tenure. These reforms were well received by major corporate executives and economists. The introduction of retrospective taxation by him was criticised by some economists.Mr Mukherjee has been praised for the confidence he inspired in
key stakeholders, by virtue of his fuel price reforms, fiscal transparency and inclusive growth strategies.
Mr Mukherjee was engaged in bringing back the black money of Indians stashed abroad. For this, he signed several double taxation agreements with many tax havens and was involved in global efforts to bring back money from these havens. (UNI)
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