By Ian Bhullar
Jul. 26 – Pranab Mukherjee, until recently India’s sitting finance minister, has been elected president of India. Having garnered the requisite number of votes in an ongoing count on Sunday, he took office on Wednesday.
Some media outlets have lauded Mukherjee as Asia’s and the world’s best finance minister, while others have described him as the worst finance minister in India’s history. What role will Mukherjee play, and what is the outlook for his presidency?
Mukherjee’s track record
Dubbed the “master of ministries,” Mukherjee has occupied the post of Finance Minister twice, as well as the offices of Minister of External Affairs, Minister of Defense, and Deputy Chairperson of the Planning Commission. His successes include having pulled India out of a foreign exchange crisis while Finance Minister in the early 1980s: a crisis which had forced India to seek a loan from the IMF. By 1984, Mukherjee was able to announce that his government had achieved recovery without using the entire loan.
“We have not cut subsidies. We have not cut wages. We have not compromised on planning […]. We have not faltered in our commitment to anti-poverty programs […]. We have come out of it with our heads high,” he said at the time.
But in looking ahead to Mukherjee’s presidency, many commentators prefer to forecast with an eye on his more recent track record as Finance Minister since 2009. Amid the recent global economic turmoil, Mukherjee oversaw a drop in GDP growth from 8.4 percent in 2009-10 and 2010-11, to 6.5 percent in 2011-12. The fourth quarter to March 31, 2012 logged a low of 5.3 percent year-on-year. Meanwhile, the country is battling a hefty fiscal deficit, and gross fixed capital formation, a measure for investment activity, has dropped to a four-year low at 29.5 percent of GDP.
The Indian government attributes much of this weakness to the continuing global economic downturn, but failures of the incumbent government are also very visible contributing factors.
Retrospective taxation and the threat of general anti-avoidance rules have reportedly resulted in capital flight, as foreign investors fear that India presents an environment that is increasingly unfriendly to investors. At the same time, legislation that is supposed to rationalize India’s investment environment, such as the Goods and Services Tax, are repeatedly delayed.
In his defense, Mukherjee can claim to have worked with a deeply divided coalition government and to have been burdened by costly promises of colleagues, such as Sonia Gandhi’s rural jobs guarantee scheme.
Ironically, this experience dealing with so many competing interest groups will be important in tackling the new challenges of the presidency.
The role of the president
Although the role of president is largely that of a figurehead, there are times when the incumbent makes decisions that have a bearing not only on political outcomes, but also on the very apparatus of the state. In official terms, the president is responsible for selecting members of the cabinet, judges and military officials. Most notably, with India’s persistent tendency for hung parliament outcomes, Mukherjee will be activated to select the ruling government after India’s election, to be held by 2014.
Will Mukherjee display a bias towards Congress in this situation? If (as in 2004 and 2009) Congress emerges as the largest party, it is of course probable that he will follow the voters’ mandate and support the party in which he has created his career.
If the outcome is less clearly in Congress’s favor, Mukherjee may have reservations about accepting a BJP government. As the BBC states, the new president “harbors a healthy suspicion of the Hindu right.”
For the most part, however, the president’s power is constrained even at this juncture. Should the BJP present signatures demonstrating that it has enough coalition supporters to form a majority government, Mukherjee will be bound to accept. This follows the example of a similar BJP-led hung parliament in 1998. At this time, President K. R. Narayanan, who was also a member of Congress, accepted the formation of government under BJP leader Atal Bihari Vajpayee.
Regardless of how he exercises his government-forming prerogative, simply his more active political persona will make Mukherjee a more noticeable presence than his predecessors. With a reputation for being a constitutional expert, Mukherjee is likely to carefully scrutinize legislation submitted to him for final approval, which will make his a presidency to pay attention to.
In his first speech after assuming office, Mukherjee assured the country that he would “strive to defend our Constitution not just in word, but also in spirit.”
This has been taken to mean that he will not just be a rubber stamp to legislation.
More than this, he has specifically stated an intention to improve the conditions of India’s poor.
“For our development to be real, the poorest of our land must feel that they are part of the narrative of rising India.”
These comments are already attracting attention in the media. If nothing else, it is clear that Mukherjee’s voice will be strong enough to shape national discourse over the coming years.
It is hard to predict the effect that Mukherjee’s presidency will have on ordinary foreign investors, especially as he seems set to take the role in a new direction. He has already been called “by far the most experienced politician to grace the Rashtrapati Bhavan.”
With such experience it would be surprising if he did not bring new ambitions and ideas to the job.
As a president with extensive understanding of the economy, perhaps Mukherjee will bring some of his discourse-setting power to bear on encouraging policies supportive of investment and growth. Free of the burden of coalition government, this could prove refreshing.
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