Huge tasks ahead for the new Finance Minister

Pranab Mukherjee who demitted office as Union finance minister on Tuesday will be missed not so much for his skills in handling the finance portfolio as for the wide range of functions he fulfilled — the two dozen ministerial panels that he headed in myriad fields and his acumen as the government and Congress party’s troubleshooter.  For his successor, this is both a challenge and an opportunity because with less than two years to go for the next general elections a lot would depend on whether he is able to pull the economy out of its morass. A faltering economic growth, sticky inflation, stalled financial sector reforms and the government battling strong perceptions of policy paralysis are some of the major challenges that would confront the new finance minister. The steep current account and fiscal deficits have affected investor confidence and led to a record depreciation in the rupee. These will have to be better handled.

The new finance minister will be expected to push through reforms in the financial sector especially the  insurance and pension bills as well as in taxation  particularly the goods and service tax and the direct taxes code which is due for implementation from April 1, 2013.  Multi-brand retail and aviation are also sectors where there is a need to act. Reducing the quantum of subsidies and keeping the fiscal deficit under check will be major challenges too. Considering that the Trinamool Congress chief, Mamata Banerjee, stands devalued at this point of time for having played her cards poorly in the run-up to the presidential election, the government may now find it easier to push through some reforms. But Mukherjee’s successor would require deft diplomatic skills. The contentious GST Constitutional Amendment Bill will need to be carried through after bringing the states on board. The base price of spectrum to be auctioned shortly would need to be sans controversy. The new FM would indeed be watched closely because his success or failure would have a major bearing on the future of the UPA.