External forces must have prompted the UPA to push Pranab as President
By Nantoo Banerjee
The Congress decision to field Pranab Mukherjee to contest the forthcoming presidential election is, on the face of it, devoid of any fundamental logic, if not political decency. Few will disagree that Mukherjee is one of the most trusted party seniors who deserved a better treatment from the Congress satraps than be removed as the country’s most experienced finance minister mid-way through his inning and be nominated to fight for a titular post, the President of India. It is more so when the economy passing through turmoil for reasons, which are as much internal as external. Yet, the truth is: Pranab babu is the Congress choice for the country’s next president’s post. Two more key constituents of the United Progressive Alliance (UPA), which govern the country, namely M. Karunanidhi’s DMK and Maratha strongman Sharad Pawar’s NCP, have endorsed the Congress choice though the second largest combine in the UPA, after Congress, Mamata Banerjee’s TMC has vehemently opposed the decision.
What might have influenced the Congress think-tank, led by its chairperson Sonia Gandhi, to take such an unusual decision? Was there a hidden logic or even an agenda to see Pranab babu off the active political platform, a passion for him, which he was associated with for over 50 years since he began as a part-time college lecturer shuttling every week between Krishnanagar and Diamond Harbour – a distance of about 100 kms between the two West Bengal district towns to take classes? Was the government under pressure from strong forces – external or internal or both – to displace him? Did Pranab babu himself express his resolve to leave the ministerial function under such pressures? Did he become a liability of the present UPA government?
Events in the last two years point at several such possibilities. An impassioned analysis of some of the events may provide some strong answers. Pranab babu’s extremely useful role towards the formation of the first Congress-led UPA government in 2004 by garnering the external support of a large group of Left party members in Parliament helping the Congress party to take full control of the government, holding almost all key ministerial portfolios, can’t be denied even by his sworn political critics. The UPA had a generally trouble-free term for nearly four years until 2008 when it insisted on the implementation of the Indo-US civil nuclear co-operation agreement, which the left parties opposed vehemently leading to its withdrawal of support to the UPA I. Pranab babu failed to convince the ideology-blind Left on the nuclear deal.
Pranab babu was again instrumental in garnering the support of Mamata Banerjee’s Trinamool Congress (TMC) for the formation of the UPA II. Unfortunately, he failed to meet the expectations of Mamata, popularly addressed as Didi (elder sister), to bail out her state government from an extreme financial crisis – a result of financial profligacy practiced by West Bengal’s Marxist-led combine, Left Front, for 34 consecutive years. She has almost gone begging for a special financial package or at least a three-year moratorium on interest repayment on past loans to the prime minister, the UPA chairperson and, of course, her Pranabda, the union finance minister. But, she returned mostly with sympathetic hearing and dry promises. New Delhi made some additional financial accommodation, but that is far short of her needs, leave alone expectation. Off late, she has been almost on a warpath with the Congress, in her home state as well as at the Centre. Although Pranab babu alone can’t be faulted for not positively redressing her financial distress as he would need the prime minister’s as well as the union cabinet nod before granting any large relief, the centre’s stubborn attitude incensed her. The finance minister was projected as the real obstacle to West Bengal’s economic survival and progress.
The UPA chairperson and the prime minister too were unhappy with Pranab babu for his inability to secure Didi’s support on key economic reforms at the national level on matters such as FDI in retail, foreign participation in pension fund management, foreign control in banking and insurance sectors and fuel price increase, to name a few. Although Mamata was held singularly responsible for the reform blues, the union government has been under constant external pressure, particularly from international investors, the IMF and the World Bank, on the sudden halt in the economic reforms process, resulting in a slow-down in FDI and FII inflows and rising dependence on foreign borrowing. Internally, the industry blamed the finance ministry and the Reserve Bank for the fall in industrial production and GDP numbers in the last three years for their rigid stance on high interest rates. The finance minister, battling to fight the high rate of inflation for three successive years, constantly received the flak both from political parties and the captains of industry. The latter seem to be in a celebratory mood for his impending exit from the finance ministry.
Pranab Mukherjee’s trouble-shooter tag fast started loosening after Mamata’s ascendancy to supreme power in bankrupt West Bengal. Even among his own cabinet colleagues, his integrity seemed to be suspect after the phone-tapping and eves-dropping drama that unfolded in the finance minister’s office. The leakage of Mukherjee’s confidential note to the prime minister on his predecessor’s role in the finance ministry to allow the controversial 2G spectrum allotment to private parties without auction embarrassed the PMO and the government. Mukherjee was clearly under stress and lost his cool frequently in public debates and interactions.
But, Pranab babu’s biggest undoing was the introduction of the retroactive tax in the 2012-13 budget, especially with regard to capital gains tax payable to the government on transfer of Indian corporate assets through Vodafone-style M&A deals held abroad. The provision angered the business community from the West so much that British Prime Minister Tony Blair, German Chancellor Angela Merkel and US Secretary of State Hillary Clinton had reportedly taken up the issue directly with Prime Minister Manmohan Singh. The finance minister was clearly under pressure. But, he was obstinate about not deleting the provision entirely before passing the budget. Branded as a socialist in the West since his first job as India’s finance minister under the stewardship of prime minister Indira Gandhi, Pranab Babu was never liked by most industry barons at home and abroad and also multilateral institutions such as IMF and World Bank. As many as seven top US industry, trade and securities associations had sent written complaints against his 2012-13 budget to the US treasury secretary and secretary of state and wanted them to convey their concerns to the highest level of the UPA government.
Finally, the biggest external pressure came from the world’s No. 1 sovereign rating agency, Standard & Poor’s, which had threatened to down-rate India to the ‘junk’ grade from the current level of ‘BBB-‘ if the country’s economic administration fails to take corrective measures (meaning reforms) immediately. Quite undiplomatically, the union finance ministry challenged the S&P’s rating methodology and even threatened to approach the globally third ranking French agency, Fitch, for a fresh sovereign rating. Even before the S&P’s warning, the country’s present doleful economic condition was equated with the situation prevailing in 1991 by no other than a former top bureaucrat, Rahul Khullar, while in office and the chief financial advisor to the finance ministry, Kaushik Basu, an internationally acclaimed economist, who came to India on lien to help Mukherjee and the UPA government. Surprisingly, the PMO rewarded Khullar with a post-retirement government job. Basu will be leaving soon for his alma mater, Cornell University.
Clearly, ‘trouble-shooter’ Pranab Mukherjee found himself in deep trouble. He had never been an integral part of the prime minister’s inner circle comprising Montek Singh Ahluwalia, C. Rangarajan and Rahul Khullar. Now, he has nearly lost his political utility in the government. Mukherjee, who was never able to create a strong political base in his own home state, is being seen as a liability. Mukherjee may be grateful to the UPA chairperson and also felt relieved after his nomination by the party to contest the Presidential election. For the Congress party, Mukherjee’s astute political sense and commitment to the Nehru-Gandhi family may be of help to the party if he becomes Rashtrapati and the Parliamentary election fails to decide. Who knows he can play the role of a king-maker once again to help his old party. The next big thing for Mukherjee is to win the election, which may not become very easy this time despite verbal assurances from SP and BSP. (IPA)