beyondbrics

Manmohan Singh, India’s prime minister, desperately needs to re-energise an administration wallowing in corruption scandals.

What better way to do that than with an audacious cabinet reshuffle.

To right a severely listing ship of state and give the Congress party even half a chance of wining 2014 parliamentary elections, a major refresh is at hand.

Pranab Mukherjee, the finance minister, is almost certain to be replaced.

The septuagenerian Mr Mukherjee is a Congress party veteran. Such is the longevity of a career in Indian politics that he was banking minister under slain prime minister Indira Gandhi in the 1960s.

In spite of a reputation as a capable trouble-shooter, he has not been able to push forward the economic reform agenda since he took over the portfolio after the ruling coalition was re-elected in 2009.

A direct tax code, a goods and services and retail liberalisation are reforms that have yet to be done. There is a list of others, including insurance sector reform, paring down of a hefty subsidy bill and measures to invite lagging foreign investment.

Mr Mukherjee will also handover to a successor a headache of uncomfortably high inflation and questionable commitment to a target of a 4.6 per cent fiscal deficit this year.

The man to replace him should be Montek Singh Ahluwalia, the deputy chairman of the Planning Commission. Mr Ahluwalia, 67 years old, is an internationally respected economist and has served as India’s G-20 sherpa while shaping India’s broad policy direction.

A former World Bank official, he was touted as a possible candidate for the managing director job at the International Monetary Fund.

Yet his appointment, likely favoured by Mr Singh, is unlikely. His critics deem him too much of a liberal thinker and at too greater remove from India’s more socialist leaning past. Besides, he might make too close a compact with the like-minded Mr Singh.

Instead, the frontrunner is Palaniappan Chidambaram, currently home minister. He would be returning to the job he vacated for Mr Mukherjee. Other possible candidates are C. Rangarajan, the prime minister’s chief economic adviser, or Kabil Sibal, a lawyer who has earned spurs in the education and telecoms portfolios over recent months.

Mr Sibal is much in demand. He is also tipped as having the kind of safe pair of hands suitable for the foreign ministry.

Just as it is dangerous to predict accurately the outcome of a reshuffle expected to come before the monsoon session of parliament on 1 August, calling time on Mr Mukherjee’s political career would be premature. Mr Mukherjee is just the kind of elder statesman who would sit well in Rashtrapati Bhavan (Sanskrit for presidential house) in the seat of the presidency when that falls vacant in July next year.

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India: A queasy feeling about inflation, beyondbrics
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