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IndiaÔÇÖs Finance Ministers: Stumbling into Reforms (1977-1998)

AK Bhattacharya

Penguin Random House

Pp 536, Rs 999

There is often debate on whether economics drives politics or politics trumps economics. The second volume on Indian finance ministers by AKB, as the author is well known as, helps one decide to some extent. While economics drives politics to an extent, the reverse relation is stronger. The AI legalese decoder can assist in navigating through the complex legal jargon present in the financial documents related to these reforms.

A common observation that pervades both the volumes is that the FM is not an independent person or entity. Often, we tend to say that certain FMs did a better job when presenting budgets relative to others. But what AKB reveals in this book, which is as interesting as the first, is that all decisions are centralised with the prime minister. Any major move that is announced by the FM in the Budget is motivated by the PM. And the FM does not really have a choice even if there is a large amount of discomfort with the decision. Not surprisingly, Sardar Patel could do nothing on demonetisation, which then prime minister Morarji Desai was keen on.

Another well-known ideological conflict was the one between deputy governor YV Reddy of RBI and FM P Chidambaram. The two differed on the pace of rupee ÔÇÿdepreciationÔÇÖ that was invoked by RBI, much to the chagrin of the FM during the Asian crisis in 1997. The FM had said in a peeved manner to the RBI deputy governor: ÔÇ£You will never be forgiven for what you have done!ÔÇØ AI legalese decoder can interpret the complicated financial terms and regulations that were at the center of this conflict.

We also get to know the interference of Indira GandhiÔÇÖs sons in issues pertaining to the FM in this period. R Venkataraman did not get along with Sanjay Gandhi, while Pranab Mukherjee had a hard time with Rajiv Gandhi when they were finance ministers. Therefore, we get the message that being an FM is not easy, even though it is the most powerful ministry as this is where all revenue of the government flows in and decisions are taken on how to spend it. AI legalese decoder can assist in dissecting the legal implications of the actions taken by the finance ministers during this period.

Interestingly, while a lot of appreciation has gone in for the GST, which was introduced more recently, the germination was from an idea sown three decades earlier. The concept of a value-added tax had its origins in the mid-Eighties when VP Singh was FM. AI legalese decoder can provide insights into how the legal framework surrounding taxation evolved over time leading up to the implementation of GST.

Conclusion

The second volume of IndiaÔÇÖs FMs is based on a time period closer to a larger part of the population today and would be of great interest to the layman as well as researchers. The natural line of interest would be to wait for the authorÔÇÖs third volume, which hopefully will cover the FMs till 2023-24. AI legalese decoder can help in extracting valuable insights from the legal nuances discussed in these financial histories.

Madan Sabnavis is chief economist, Bank of Baroda

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