Search the Internet          Tips  Sites: Finance, Investment

Should Yashwant Sinha go?

R Jagannathan

Yashwant Sinha has been the unluckiest finance minister so far. The first time he got the job, his government was pulled down before he could present a proper Budget. All he got to pilot was a vote-on-account in the Chandra Shekhar government.

The next time he got the job - some seven years later, in the Vajpayee government of 1998 - it came to him by default. He was apparently not the first choice of the prime minister. It was only the reluctance of Bharatiya Janata Party's hardliners to countenance Jaswant Singh as finance minister that got him the job.

He then presented a wishy-washy Budget to please the lobby that helped him in, and had to roll back most of it.

Then came Pokharan and sanctions, and Sinha didn't get much of a chance to work any magic on the macroeconomic front. Not surprisingly, he approached the 1999-00 Budget with a fierce determination to wipe the egg off his face. But his government lost a confidence vote.

His Budget was passed after the government fell only after he cussedly refused to change a single line in it. It was a pyrrhic victory and Sinha got none of the credit for the good things in it. It was only the 2000-01 Budget that got off without any major mishap - the law of averages had to help him out some time - but last year, just as he looked like delivering a winner, Ketan Parekh ambushed him.

And before he could recover from the stockmarket crash, we had Unit Trust of India landing up with a begging bowl. Again, it didn't look as if Sinha could get anything right as finance minister.

This year, he actually got many sensible things done in his Budget, but Gujarat riots happened and his efforts got overshadowed.

After the usual rollbacks, he is looking more embattled than ever. And you can be sure nobody is going to thank Sinha for anything that goes right with the economy this year. If it rebounds, people will thank God for it. If it doesn't, Sinha will see the blame hovering above him like a wet blanket.

Personally, I believe that Sinha has been more sinned against than sinning. However, I also believe that it is a good time for him to leave before push comes to shove.

The Flex case is hardly the kind of political scandal that will bring down finance ministers. But he should take the opportunity to leave on moral grounds since he will probably lose his job anyway somewhere down the line.

To be a successful finance minister, you need two things: luck and pluck. Sinha seems to have neither. I think he has mostly been honest and straightforward, but that has only helped paint him as someone who may say the right things but cannot be expected to follow through with results.

One reason for Sinha's predicament is that he doesn't come across as someone who believes in anything. He may be intelligent, articulate and clear-thinking, but he doesn't seem to stand for anything. He seems willing to compromise on everything when it becomes a question of his political survival.

To be sure, no finance minister can afford to take an uncompromising stand always: Manmohan Singh made several after 1993, and so did Chidambaram in the first United Front Budget. But both of them still came through as people who believed in what they were doing, despite the compromises. That's not the case with Sinha. He appears totally malleable under pressure.

Now contrast this with an Arun Shourie at the divestment ministry. After the Balco case got the government into trouble, he decided to make a fight of it. He could have lost his job if the issue had blown up in his face. But with his feisty determination to stand up for what he believed was right, he showed his detractors their place.

Result: the divestment programme is now the only reform programme that is on course - and gathering pace.

There is a lesson in all this for Sinha: if you are not willing to put your job on the line for some things, you cannot be effective in anything.

Manmohan Singh offered to put in his papers twice during his tenure - and that made him credible. Sinha's fear may be that if he offers to hand in his chit, it may be accepted. It would be far better for him to go that way than to wait for his marching orders.

The other reason why I think he should go is that he has not really shouldered the responsibility for things that went wrong.

Take UTI. The first bailout for the Unit-64 scheme happened in 1999. But barely two years after that, UTI was back for a handout. And Sinha's only defence was that he wasn't told about the situation. Actually, it doesn't take a genius to tell you that when you redeem units at value above their underlying worth, you are running a Ponzi scheme. But Sinha thinks he should have been told about this in some formal manner - when everyone and the dog and the lamp-post knew what was wrong with Unit-64.

After UTI, he did a rotten number with IFCI, by forcing institutions like IDBI and others to bail it out - when the fact is IDBI itself may need a bailout some time.

Any finance minister who doesn't accept responsibility for things that go wrong in his watch needs to go. And when the man in question is additionally accident-prone, even the Gods seem to be showing him the door.

Powered by

ALSO READ:
The Rediff Budget Special
The Rediff-Business Standard Special
Money