By Andy Mukherjee
Partly by default, and partly by design, Indian Prime Minister Narendra Modi has managed to assemble a newish-looking team for his second term. Hopefully, the freshness will carry over to ideas.
The top job in the finance ministry opened up as Arun Jaitley, who held the position during Modis first five-year term, made himself unavailable for health reasons. The prime minister picked Nirmala Sitharaman to become Indias first full-time female finance minister. Sitharaman previously handled defense and commerce but lacks the experience typical for whats traditionally considered the cabinets No. 2 job, having been a member of parliament for only five years. Several of Indias past finance ministers have gone on to become prime ministers and presidents.
So perhaps the prime minister himself wants to be closely involved in supervising the economy. Thats good and bad. Decisive leadership is required to unclog the jammed financial channels, speedily privatize state-run businesses, and give private investments a decisive push. The risk with strongmen leaders is that they tend to give short shrift to institutions and independent-minded counsel, something that Sitharaman herself will need to be mindful of when implementing her bosss plans.
What the new Indian finance minister lacks in heft, she must make up with organizing ability, as a sort of coordinating minister for economic affairs. A signature reform investors expect from Modis second term is a new labor law – a single, flexible code to replace a plethora of antiquated rules. With Sitharaman as the point person for finance, and Modi keeping a close tab, the labor ministry will be working overtime to deliver a bill. Ditto for land acquisition, a major roadblock for infrastructure and industrial projects, as my colleague Anjani Trivedi wrote recently. The BJP has a comfortable single-party majority in the lower house of parliament, and may gain control of the upper house by next year. That augurs well for a simplified, less-time-consuming law for acquiring and pooling farmland for new purposes, something Modi was unable to carry through in his first term.
Sitharamans not-to-do list will be equally crucial. Given how badly India needs risk capital from the rest of the world, one of her priorities will be to rein in an overzealous bureaucracy itching to raid the central banks reserves. That misadventure, if encouraged, would further emasculate the Reserve Bank. Her other task will be to extricate the government think tank from meddling in GDP statistics, whose quality has recently become a pet peeve of investors.
While Sitharaman as finance minister is a somewhat surprising selection, the most inspired choice in Modis new cabinet is a non-politician. As a diplomat, Subrahmanyam Jaishankar negotiated with the George W. Bush administration toRead More – Source