Manmohan Singh: Finance Minister in waiting

[Deep Singh]

Manmohan Singh: Finance Minister in waiting

http://sify.com/news/fullstory.ppa?id=13476167

Sunday, 16 May , 2004, 09:51

New Delhi: When India's share markets went into a tailspin last week after the opposition Congress scored an upset electoral win, the party wheeled out its trump card to soothe nervous investors: an elderly, softly-spoken bureaucrat-turned-politician admired at home and abroad.

Manmohan Singh, hailed as the man who set India on the path to economic reform 13 years ago, looks almost certain to be finance minister in the new leftist-backed government headed by Sonia Gandhi, widow of slain premier Rajiv Gandhi, who is expected to take office this week.

"Market Left bruised, Congress calls in the Doctor," read a headline in The Indian Express, after the party called on Singh to assuage investor fears that the rag-tag band of communist, socialist and regional groups it needs to govern would stall reforms seen as vital to keeping India's economy in the fast lane.

The 'Doctor' administered the medicine in measured tones.

"We'll pursue policies that promote rapid social and economic development, growth of savings and investments, create a favourable climate for enterprise," the turbaned Sikh told reporters, adding he was confident Congress could "overcome these 'small problems' of working with communists".

"There will be no difficulty in smoothly running the central government."

The Oxford-and-Cambridge educated Singh, 71, who has served at the International Monetary Fund

, is no stranger to crisis.

In 1991, Singh, former governor of India's central bank, got a telephone call from then Congress prime minister PV Narasimha Rao, widely seen by observers as uninspired and unimaginative. They could not have been more off-base in their judgment.

Rao named Singh finance minister and gave him a mandate to throw off the socialist controls shackling India's economy and open it up to the world.

At that time, India was in the grips of deep economic turmoil, with a balance of payments crisis exacerbating the gloom that had set in after the assassination of Rajiv Gandhi that year.

Its hard currency reserves had sunk to the equivalent of less than a month of imports and India was on the brink of defaulting on its foreign loans.

Singh told the nation the economy was in crisis and began dismantling what was known as the "licence raj", a system of economic management ruled by government monopolies, quotas and permits that dictated what and how much firms could make.

To some, Singh, a shy, unassuming character, seemed an unlikely choice to be an economic fireman even though he was a respected economist and former senior civil servant. Later, he said his time in the civil service had persuaded him big changes were necessary.

"If you have a rigidly controlled economy, cut off from the rest of the world by infinite protection, nobody has any incentive to increase productivity and to bring new ideas," he said in a 1991 interview.

With Rao's support, he brought in changes that broke sharply with India's past. Singh, the lone Sikh in the cabinet, devalued the rupee to spur exports, loosened foreign investment rules to lure capital from abroad, slashed tax rates and sought to cut through red tape ensnaring companies.

Singh, who was born in the Punjab and who said he decided to study to find a way to eradicate poverty, said spiralling fiscal deficits and profligate government spending were putting an

unsupportable strain on the economy.

He quoted French author Victor Hugo in parliament, saying "No power on earth can stop an idea whose time has come" to persuade lawmakers that structural changes were needed to make India a major global player and help free it from poverty.

His efforts during Congress's five-year stint in power bore fruit. He rebuilt India's foreign reserves - they now stand at a record 117 billion dollars - after being less than a billion.

Foreign investors rushed in, seeing India as one of the last <admin-profanity filter activated> capitalist frontiers.

Inflation halved to 8.5 percent from 17 percent. It now stands at just over four percent.

Still, many say more changes are needed if India is to create the growth needed to significantly reduce the deep poverty that still ensnares at least a quarter of its population of over one billion.

Now, with India's economy on a roll - third-quarter growth was 10.4 percent - if Singh takes over the finance portfolio, he will have another chance to propel India forward.

But some economists wonder if the task will be tougher for him because Congress will be in power in an alliance that includes leftists and communists, whereas last time he had a free hand with Rao's backing.

"He's the best architect for modern India as far the reform process is concerned. People have great regard for his ability to deliver. But the question is how much freedom he'll have with the leftists," said Motilal Oswal, chairman of Motilal Oswal Securities.

Singh says Congress's aim is to promote faster growth, ensure a social infrastructure and alleviate poverty.

"I don't think there will be any problem with the Left."

[Guest mehtab]

he is a good guy stuck with congress

i was hoping he'd become the next prime minister :wub:

oh well...hope he does a good job as finance minister