Is Nirmala Sitharaman Bearing Brunt of Male Predecessors’ Errors?
Union Finance Minister Nirmala Sitharaman can be critiqued on several counts. She has introduced new rules for entry into North Block that are disrupting meetings that had so far taken place on terms and timings mutually agreeable to journalists and the bureaucrats of the Ministry.
Making history, she decided – or agreed – to omit from her maiden budget speech the numbers, or the budgeting, relegating the meat of the exercise to the fine print. The exclusion immediately sharpened public focus on the large shortfall in tax collections, winning her no brownie points.
Many of her statements – such as on IAS officer S.C. Garg’s (the former Finance Secretary who was transferred to the Power Ministry in a large bureaucratic rejig) application for voluntary retirement – have ended up adding to the confusion, rather than clarity.
Seen together, the missteps, convey an impression of increased obfuscation, decreased transparency, and an attempt to clamp down on the flow of officially-sourced information important for money and other markets.
Economy Critics Have Suddenly Found Their Voice
The investing classes, in particular, have found their voice unexpectedly after the 5 July Budget’s provisions related to taxation did not gone down well with them. Markets do not relish uncertainty and conflicting information. The stock market no longer appears optimistic about the Modi government’s policy approach to the economy’s problems.
The economy has been slowing down for three years. GDP growth has lost pace significantly in the last three years and performances of several sectors have plunged to multi-year lows. Captains of industry that had been mute spectators for three years have suddenly started speaking about the sliding economy, and the policy system’s insouciant response to it.
To be fair, most of the troubles the economy is facing today started long before Sitharaman was named the finance minister. Her tenure as the Commerce Minister can be criticised for lackadaisical exports performance. But the investment and policy crises originated and worsened long before she was appointed in charge of the Ministry.
How much leeway does a finance minister have anyway in shaping the economic policies of the Narendra Modi government that operates largely through an empowered Prime Minister’s Office?
Crises Inherited By Sitharaman
The alarming fiscal crisis, evident in the 5 July Budget’s fine print, was handed down to Sitharaman by her predecessors. The Interim Budget’s estimates over-projected tax revenues for last year, 2018-19, by whopping a 0.9 per cent of GDP. They were prepared under Piyush Goyal’s watch. Yet, he has escaped criticism altogether for his budget calculations going awry.
The Central government’s tax revenues for the financial year ending March-end 2019 — as reported by the Controller General of Accounts (CGA) — fell short of Goyal’s estimates by Rs. 1,67,972 crore.
Sitharaman has, in fact, to an extent made corrections to the Interim Budget’s incredible estimates. She has budgeted for lower tax revenue in the ongoing financial year, 2019-20, than Goyal had in the Interim Budget. Plus, she did well in resisting demands for pump priming the economy, making the 5 July Budget a fiscally prudent one.
Goyal’s Interim Budget’s fiscal giveaways – showered on voting classes in preparation of the general elections 2019 – have placed severe burden on the exchequer at a time government is failing to raise sufficient tax revenues for a variety of reasons, not all beyond its control. Responsibility for all of which is being heaped on Sitharaman in the public narrative.
Bouquets for Male Predecessors, Brickbats for Sitharaman?
Is Sitharaman receiving more criticism than her predecessors have for problems she has largely inherited? It could be argued that sending out conflicting signals and an unthoughtful communication strategy has won her no friends, but her predecessors were only marginally better at this. Is implicit gender bias at play?
The investment slowdown started in the tenure of the second UPA government’s finance minister of more than three years, Pranab Mukherjee. The non-performing assets (NPAs) crisis in the banking sector was seeded in his tenure. North Block pushed public sector banks to lend enthusiastically to keep projects alive after they were hit by the global economic downturn in wake of the 2008 financial crisis and the policy paralysis at home. The inflation rate spiralled to a high of 20 per cent, the central government’s reported fiscal deficit widened to 6 percent of GDP, and the economy was driven to the ignoble distinction of being named one of the ‘Fragile Five’.
Yet, Mukherjee was rewarded by the country’s highest honours. If the UPA government picked him as its Presidential candidate, the Modi government decided to confer the Bharat Ratna on him.
Even Sitharaman, the Finance Minister, Is Not Immune to Mansplaining
The gender bias within the government system was evident even in one of Sitharaman’s early meetings in North Block, a pre-budget consultation with economists. Flanked by the two senior-most secretaries in the Ministry, she headed the meeting. But even before one of the invitees to the meeting had finished speaking on a particular issue, by turns, the two male secretaries, seeking to present counters to the Minister, tried explaining the matter to her. She had to tell them to let her ask the questions needed to understand the point the invitee was trying to make.
“Secretaries to Government of India were mansplaining the Finance Minister,” said an economist present at the meeting, recounting the episode.
After keeping mum through the economic policy errors made in the first term of the Modi government, commentators sympathetic to the prime minister and tight-lipped captains of industry are feeling lesser hesitation in criticising Sitharaman for decisions taken in the tenures of her predecessors. Is it easier to criticise Sitharaman because she is a woman?
(Puja Mehra is a Delhi-based journalist. Her first book, The Lost Decade (2008-18): How India's Growth Story Devolved Into Growth Without a Story, has been published by Penguin Random House. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)
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