FE Editorial : Running finance

Written by The Financial Express | Updated: Feb 1 2009, 05:26am hrs
Much of the medias political discussion on the Prime Ministers surgery and the subsequent convalescence centred around the question whether a Congress leader should be formally anointed as acting Prime Minister. That was perhaps overstating the case for institutional continuity given that the PMs absence was going to be temporary, relatively brief and that he was expected within days to be back in communication, if not in office. The real question and one that precedes the PMs medical leave is why there isnt a finance minister. It wasnt an optimal solution for the PM to look after finance after P Chidambaram took over home. Pranab Mukherjee having to look after finance for the period of the PMs medical leave simply makes the original problem more stark. Many reasons have been proffered why the Congress couldnt find a suitable finance minister. None of them addresses the question why a national party should consider itself so devoid of talent. A related question applies to ministers of state. In important ministries like home, finance, foreign affairs, etc, allied party picks usually fill junior ministers posts. Among the qualities allied party leaders look for while picking these appointees, suitability for the job at hand doesnt matter at all. To make matters worse, senior ministers of the big party prefer talentless junior ministers from allies. The assurance is greater then that the ministry will always be with the big party. This is why junior ministers in big ministries are completely irrelevant when it comes to filling in for the senior minister. This is a dreadful subversion of the principles of good administration and one of the big costs of coalition politics.

In this hugely sub-optimal situation, Asias third-largest economy is preparing to undertake crucial jobs under the finance ministry. To name just two, theres the third stimulus package and theres the tricky issue of persuading banks to lend (tricky because while banks should lend, directed lending can be worse than little lending in some situations). The absence of a full-time, senior finance minister who carries weight and can give full attention to the job has orphaned reforms such setting up a debt management office. DMO legislation was never really expected in this governments term. But after all the intellectual hard labour put in, a full-time FM could have shepherded the proposal through the Cabinet stage. If theres an unexpected economic event to deal with between now and when the next government takes office, it is frankly absurd to think that there will be no full-time FM to take charge. As we said, this criticism applies even when the PM is back in office and takes additional charge of finance from the EAM (external affairs minister).