Handling the finances of a country like India is not a mean task, and thus, the people who take up the job of handling the Finance Ministry are put under the microscope and closely scrutinized as well as chastened. However, for a long time, the Nehruvian socialism of Congress and the reluctance to usher in a liberalized world held India back on the finance front.
It didn’t help the cause that after liberalization, another set of incompetent Congress Finance Ministers took the charge and nearly ran the country to the ground.
A key duty of the ‘Vitt Mantri’ is to present the annual Union Budget in Parliament, which details the government’s plan for taxation and spending in the coming financial year. However, over the years, several Finance Ministers have spectacularly soiled the bed, trying to present it and thus we are compelled to furnish another list – a list that is in no particular order and enlists the top-5 worst finance ministers of India.
India’s 13th President late Pranab Mukherjee had a lengthy political career, before eventually settling in the sprawling mansion of Rashtrapati Bhawan for the epilogue of his career. However, before Pranab da became the President, he also took charge as the country’s Finance Minister in the UPA-2 era.
His legacy perhaps has been tainted for bringing the highly draconian, anti-business ‘Retrospective taxation’ regime. The controversy began when Pranab announced in his 2012–13 budget speech that he proposed to amend the Income Tax Act, 1961, with retrospective effect to undo the Supreme Court judgment in the Vodafone tax case.
The BJP, which was in opposition at that time, had called retro taxation ‘tax terrorism’. Arun Jaitley, who took over as the finance minister in the Modi government in 2014, was vocal against retrospective taxation. In his July 2014 Budget, he had said that the government won’t create a fresh tax liability retrospectively.
As a result, between 2012-2014, the growth momentum depleted, and it seemed like India’s story had all but halted, before the Modi locomotive steamed in and resurrected it.
P Chidambaram, the country’s first finance minister to go to jail on charges of corruption is the template of how a Finance Minister should not operate. Chidambaram held the Minister of Finance portfolio for four times (31 July 2012 – 26 May 2014, 22 May 2004 – 30 November 2008, 1 May 1997 – 19 March 1998, 1 June 1996 – 21 April 1997), with a total duration of almost 10 years. His duration as finance minister was symbolized by the rampant corruption, and back breaking inflation.
Food Inflation, which became a major election issue in 2014 general election, and, one of the primary reasons behind Congress being reduced to 44 seats, ranged from 10 to 15% in the last two years of Chidambaram as finance minister. He even justified the high inflation, by arguing that high inflation is a sign that there is demand in economy.
Under P Chidambaram, the central government transferred over Rs 2,75,000 crore of profits from listed oil companies to consumers through subsidies to the marketing companies. This is over and above direct subsidies of another Rs. 500,000 crore paid directly from the budget.
While P Chidambaram has donned a lot of hats throughout the years, not many would know that Chidambaram is an excellent cook as well. He cooked the financial books in a way that India was termed as the growth chariot of the world. However, the supposed ‘double digit’ growth that UPA so generously takes the credit for, came without jobs. And the poverty reduction came partly from growth and substantially from doles.
He fudged the fiscal deficit numbers and painted a rosy picture. He broke, in fact he shattered the spinal cord of the Indian banking sector in 2007 by announcing a huge farm loan waiver that cost the government Rs 72,000 crore and ruined the repayment regime for banks. By the time UPA left, the Indian banks and their NPA had climbed near the 6% mark of GDP.
In 2007, he also introduced the dividend distribution tax (DDT) which promoted rich investors rather than the ordinary investors. While Chidambaram found out ways and means to improve government revenues to match expenditures of his government, market participants had no escape but to continue paying taxes even on taxes already paid.
Chidambaram himself was involved in many corruption cases including Aircel Maxis, for which he was jailed. P Chidambaram who was the then finance minister, met with Indrani and agreed to give ‘retrospective approval’ of downstream investment of more than 300 crore rupees in exchange of 5 crore rupees ‘investment’ in his son’s firm. That’s what sealed P Chidambaram’s fate.
After the Eighth General Elections in 1984, VP Singh presented the annual budgets for 1985-86 and 1986-87. VP Singh was a socialist to the core who abhorred the industrialists. He organized raids against high-profile industrialists like Dhirubhai Ambani. He had also entrusted the task of investigating the illegal stacking of foreign exchange in overseas banks by Indians to Fairfax, an American agency.
However, his hitjob methods and raids, which were based on guesswork and insinuation, soon became a tough pill to swallow. As a result, Rajiv Gandhi, the then Prime Minister of the country, sacked him from the ministry. He was later given the defense ministry, where the Bofors scam took place and was revealed for the first time.
Morarji Desai took the reins as the country’s 5th Prime Minister in 1977. However, before removing Indira from power, he worked under several Congress regimes as the Finance Minister. He first took charge of the Ministry in 1958 and held the post for 5 years. In 1967, he again took the charge and remained in the ministry for another two years before taking up the position in the Janata government for two, rather brief appearances.
During his stay in the office, the Agricultural production had been virtually flat. A respite in 1964-65 was immediately followed by two consecutive droughts. Defence spending doubled as a percentage of gross domestic product, or GDP, from 2% to 4% after the 1962 India-China war, putting further pressure on the public purse and foreign exchange reserves.
As finance minister in the Indira Gandhi cabinet, Desai brought in the controversial Gold Control Act, 1968. The Act prohibited citizens from buying gold bars and coins. Desai wanted to slow down gold imports but the demand for gold remained steady, leading to an increase in gold smuggling.
Safe to say, Desai’s tenure as the finance minister was as chaotic as his Home Ministerial stint, where he supposedly enunciated state secrets to Zia-ul-Haq, and nearly destroyed Research and Analysis Wing (R&AW), just because he had a grudge against Indira who set up the intelligence agency.
After Independence, the two Union Finance Ministers, Shanmukham Chetty, and Dr. John Matthai stayed in office for short tenures. The latter held the position from September 22, 1948, to 1 June 1950.
Immediately after independence, India had been struggling on the economic front. Inflation had skyrocketed, the cost of capital was touching new heights and the savings rate remained abysmally low.
Despite being a jack of all trades, Matthai could not help the Indian rupee from plunging into a downward spiral. With Pakistan ratcheting up the border issue incessantly, Matthai was found wanting, as India’s sovereignty was constantly targeted.
However, the most flak Matthai gets is for his aversion to the planning commission. Although Planning Commission turned out to be an evil monster in the future, India at the time quickly needed a plan in place and Matthai only delayed the process.