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Blame it on the finance minister

P Vaidyanathan Iyer

Finance minister Yashwant Sinha is not a very lucky man -- especially if you go by his track record in the last two years. Between the two budgets of 2001-02 and the current fiscal, Sinha has had to deal with the stocks scam, the Unit Trust of India muddle, sloppy revenue collections, a ballooning fiscal deficit, and, to top it all, the Flex Industries controversy.

But Sinha has always weathered criticism directed at him and has emerged much stronger. An analogy here may help.

If a company doesn't perform well, the stock markets punish the scrip by assigning it a lower value. If, after every controversy, Sinha manages to stay on in North Block, then logic holds that he deserves staying there.

If one knows Sinha well, he must be now gearing up to take on his opponents with concrete evidence. Sources close to him reveal that he is now busy compiling a list of all the investments made by top financial institutions including IDBI, IFCI and UTI before 1997.

"He is sure that much of the bad debt accumulated by these institutions are a result of the bad investment decisions taken before he became the finance minister," a source confided.

Sinha might have a point there. A few sectors and a handful of corporations would account for a significant quantum of the non-performing assets of the institutions.

And if Sinha gets to work, it would not be difficult for him to establish that all this happened even before he took the reins of the Indian economy.

A post mortem of all the accusations would perhaps put things in perspective. Take the stock scam last year. Sinha's budget last year got nine-on-ten from several industry chambers.

But a day or two after the dream budget, the stock market tumbled. And the joint parliamentary committee on stock scam has not found any reason to call Sinha to depose before it or even call for any explanation.

Take the UTI muddle. Sinha even now maintains that after 1997 the government did not quite interfere with the trust's affairs. Yes, it was kept aware of the happenings in UTI. When things turned from bad to worse, the minister had little time to act.

Whether Sinha was told about the freeze in US-64 units a day before the UTI board's announcement or two days before would be debated forever. But a decision by him, any which way, would have attracted adverse reactions.

Had he vetted the freeze, he would have been taken to task for not safeguarding investors' interests and had he not, he would have been attacked for allowing a run on the country's first mutual fund scheme. It is public knowledge now that corporates had started pulling out their funds.

While one can blame Sinha for the poor revenue forecasting in the last two years, he cannot be accused for not meeting the targets. The Indian economy after having run a smooth ride between 1994 and 1997 had encountered a slowdown.

Excess capacities in automobiles, cement and steel had led to a piling up of inventory. It is only in the last two years that the capacities have been used up and prices and volumes seem to be picking up.

Last year, Sinha exhorted his colleagues in other ministries to spend more. He even said the ministry would help them with additional funds if they needed them for productive capital expenditure.

When things are not smooth, it is quite natural that the finance minister is blamed. The legacy of the past, Sinha calls it now.

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