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All the Prime Minister's Men

The composition of Prime Minister Manmohan Singh’s cabinet would suggest a desire to resume the process of reforms, which had practically stalled during his somewhat uninspiring previous term. It is also indicative of a more assertive Congress Party within the larger coalition of the United Progressive Alliance. The Congress has retained key economic ministries and also taken control of other important ones that were previously with their allies. With Pranab Mukherjee at the Treasury, P Chidambaram at Home and AK Antony at Defence, three crucial departments appear to be in the most capable hands.

Mr Mukherjee, possibly the senior most member of the Singh administration, has over the years served in various positions in the government. He was India’s Finance Minister between 1982 and 1984 in the Indira Gandhi cabinet and brings to the table considerable technical competence and robust political acumen. Disinvestment of state-owned enterprises; financial sector reform; the implementation of a single Goods and Services Tax and perhaps most importantly, managing India’s ballooning fiscal deficit are some of the challenges for Mr Mukherjee. Industry expects him to streamline the functioning of the revenue service which appears to have become notoriously aggressive and perhaps unreasonable over the past five years. Mr Chidambaram is known for tough administrative skills and is ideally placed to oversee India’s internal security. Mr Antony’s impeccable integrity will ensure the continuity of high standards in the Defence Ministry, frequently prone to acute levels of corruption.

After five wasted years, the Ministry of HRD finally has a capable chief in Kapil Sibal, a lawyer by training. His pragmatic approach will be essential in undoing the follies of his predecessor who carefully and meticulously damaged fine institutions with political meddling and unfit appointments. Most importantly, Mr Sibal would be expected to introduce a bill that would allow India’s higher education sector to be opened to foreign entities and to regulate their operations. Oddly, millions of Indian students study at colleges overseas, which is both expensive and inconvenient. Foreign institutions, offering courses in India, would enhance the standards of education, generate local employment, help reverse the ‘brain drain’, and save billions of dollars annually in course fees.

The Prime Minister’s determination to allocate significant infrastructure ministries to capable performers became evident when Kamal Nath was moved from Commerce to Roads. Over the past five years, the highways project suffered appallingly under TR Baalu, the DMK Party nominee in Manmohan Singh’s previous Government. Mr Baalu was also instrumental in introducing the controversial Ram Sethu project, and was allegedly accused of corruption and kickbacks. This time around, Mr Singh put his foot down, asserting unambiguously that Mr Baalu’s re-induction was quite unacceptable. Mr Nath will have to ensure that the backlog in road projects is cleared and new ones awarded quickly. Anand Sharma, previously a junior minister in the Foreign Office now heads Commerce with cabinet rank. Mr Sharma’s priority would be to ensure that India’s trade agreements with Asean and South Korea are finally sealed. Salman Khurshid , an Oxford-educated lawyer, articulate and competent, is the new Minister of Corporate Affairs. Mr Khurshid, who served as a Minister of State, External Affairs, in the PV Narsimha Rao government, is now mandated with the task of evolving a new company law, bankruptcy code and ensuring the Competition Commission gets off the ground. He would need to see that the Serious Frauds Investigation Office is further empowered, so as to deal more effectively with corporate frauds and file prosecutions.

Murali Deora returns to Oil and Natural Gas. This time our expectations of him are much higher. Mr Deora should ultimately ensure de-regulation in the price of petroleum products and the establishment of a regulatory commission to monitor fairness and competition in the sector. At present, the oil marketing companies incur huge losses, as the price of diesel, petrol and kerosene are determined by the government. They are notionally compensated through special bonds, which no one wants to buy and trade at a discount instantly. Private players meanwhile, do not receive any subsidy at all, and are being practically driven out of business. Price de-regulation in petroleum is therefore essential for the industry, as much as it is for the government’s fragile balance sheet.

Jairam Ramesh is the new man in the Ministry of Environment and Forests. With degrees from IIT Mumbai and Carnegie Melon, Mr Ramesh worked closely with Rahul Gandhi in the Congress Party’s Election Strategy Cell. He was previously Advisor to the Finance Minister, and subsequently served as a Minister of State in Commerce. Bright and pragmatic as he is, he should bring a refreshing change to the Ministry.

The induction into the cabinet of Vilasrao Deshmukh, the former Chief Minister of Maharashtra, as Minister of Heavy Industry, is indicative of the Congress party taking a demanding stance with respect to its allies – specifically the NCP and its leader, Sharad Pawar. Mr Pawar had, during the period of election campaigning, flirted with other options, distancing himself from the Congress. It’s payback time, finally.

UPA allies have been accommodated in various ministries, ranging from being highly important to completely irrelevant. Sharad Pawar returns to Agriculture and Mamta Banerjee is at the helm of the Ministry of Railways. Ms Banerjee is expected to stir things in this department – one of her first announcements was an intent to shift her offices to Kolkata. The DMK contingent gets Telecom (A Raja); Textiles (Dayanidhi Maran); Chemicals and Fertilisers (MK Azhagiri), in addition to a couple of junior positions. Most fortunately, Abumani Ramdoss lost the elections and the Ministry of Health is now in the more capable of hands of Gulam Nabi Azad.

Contrary to expectations, Rahul Gandhi has decided to stay out of the Government and concentrate his efforts within the party organisation. This is a clear indication of the Congress’ desire to reassert itself within states such as Bihar, Maharashtra and Tamil Nadu, where it had either become subservient to its allies or practically written itself off. His successes in UP have justifiably earned him new respect within his party organisation.

With 206 seats, the Congress appears suitably placed to provide durable leadership within the UPA and also determine more effectively the policies and course of its government. This Parliament should therefore see an increase in pace for new legislations and better functioning of government departments. Another development that we expect is a change in relationship – for the better – between the Congress and its main BJP opposition. Previously, personal relations were so strained that party leaderships on both sides barely exchanged cursory greetings. Even basic courtesies were denied. The Congress failed to involve the BJP in important matters of national policy and the BJP was simply unable to provide constructive opposition. We expect that personal animosity will give way to dialogue and a participative process in policy formulation.

As Manmohan Singh steps into South Block for his second term, he does so with renewed confidence and from a position of strength. He no longer carries the burden of troublesome allies (such as the Left) and has had offers of support from political parties that constituted the erstwhile Third Front. It follows, therefore, that his administration should be stable. The only things that must worry him, however, would be the unpredictable nature of Ms Banerjee, whose 19 seats are sizeable enough to create minor rumblings. However, with a bit of luck and political acumen, the Prime Minister’s men should produce better results this time round.

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