Why Yashwant Sinha Is Playing Sourpuss: His Real Grouse Is His Own Bad Luck As Finance Minister

If Yashwant Sinha, former finance minister, had stuck to just highlighting the problems the economy faced and how to get emerge stronger from it, he would have been hailed as someone who speaks truth to power. However, a large part of his recent article in The Indian Express (“I Need to Speak Up Now”), which got the government’s back up, is needlessly personal and polemical. Among other things, he took a swipe at Arun Jaitley for being made Finance Minister despite losing his Amritsar Lok Sabha battle, and claimed Jaitley could not do his job properly because he was saddled with other ministries, including defence and corporate affairs. Jaitley hit back, by indirectly alleging that Sinha was a “job applicant at 80.”

Jaitley need not have descended to this level, but the question one needs to ask is why Sinha made it so personal. The clue is contained in one line of his article. I am quoting the whole paragraph just so that one gets the full import of what he meant. “Jaitley was”, wrote Sinha, “a lucky finance minister, luckier than any in the post-liberalisation era. Depressed global crude oil prices placed at his disposal lakhs of crores of rupees. This unprecedented bonanza was waiting to be used imaginatively. The legacy problems like stalled projects and bank NPAs were no doubt there and should have been managed better like the crude oil bonanza. But the oil bonanza has been wasted and the legacy problems have not only been allowed to persist, they have become worse.”

This statement is essentially a lament about his own bad luck as finance minister in various governments.

Sinha was finance minister in Chandra Shekhar’s interim government of 1991, and, if luck had favoured him, he could well have been wearing the crown of “architect of liberalisation” instead of Manmohan Singh. But that was not to be, as Rajiv Gandhi pulled down in government in months.

Then, when he did become finance minister again in Atal Behari Vajpayee’s government, we got Pokharan 2, and the global sanctions. When he tried to reform the subsidy system by raising fertiliser prices, the farm lobby forced a rollback, earning him the title “Rollback Sinha”, when that was not his fault. Then, post the dotcom bust of 2000, we had the Ketan Parekh stock market manipulations, which brought a crash almost immediately after he presented his 2001 budget. Later that year, the UTI scam burst forth, and the government had to offer an expensive bailout for its flagship Unit Scheme 1964.

Little wonder then that Vajpayee sought someone to take over Sinha’s job in mid-2002, in the hope that he would bring him better luck. Sinha’s successor Jaswant Singh got the job and presented the 2003 budget. It was an eminently forgettable budget, but Singh turned out to be luckier than Sinha, as the economy took off vertically in 2003-04. This gave the Bharatiya Janata Party the confidence (a misplaced one, in hindsight) to call early elections, with L K Advani campaigning for a second National Democratic Alliance (NDA) term under the slogan “India Shining.”

Sinha’s hard work as finance minister earned him no kudos as the economic upswing happened after he had left the ministry and become the external affairs minister. It was Jaswant Singh’s successor, P Chidambaram, who reaped the full benefits of the reforms done by Vajpayee, Arun Shourie, and Sinha, and it is entirely understandable that he feels cheated of his dues, and holds Jaitley responsible for the luck he didn’t benefit from.

However, Sinha is surely wrong when he claims that Jaitley is “luckier than any in the post-liberalisation era” due to the oil price drop.

This is a misreading of the role luck plays in any government’s tenure. While Jaitley did benefit from the oil bonanza, the country also faced two years of deficient monsoon, a huge corporate loan default scenario, and tottering banks. The external environment, too, was not that conducive for growth. And United Progressive Alliance-era legislation like the Food Security Act and the Land Acquisition Act, were burning a hole in the Finance Minister’s pocket and acting as growth decelerators. Sinha can certainly blame the Narendra Modi government for acting rather late on these problems, but to pretend that Jaitley had all the luck is wrong. And he has certainly not misused his oil bonanza too much, since a lot of it went to infrastructure spends, without which the economy would have been in deeper trouble.

And Sinha also seems unaware of the luck he himself received. He wasn’t supposed to become the finance minister in 1998, when Vajpayee formed his first NDA government (read Kanchan Gupta’s recollections on how Sinha got the job here) . That job was to go to Jaswant Singh, but the RSS intervened and Singh didn’t get his chance till mid-2002. Without this luck, Sinha may never have been finance minister under Vajpayee. This is a job he got twice, and he should be grateful for it.

In the ultimate analysis, it is fair to say that some finance ministers may be luckier than others, and the luckiest one was surely Chidambaram. The latter inherited an economy growing strongly, with low inflation, a current account surplus, an improving fiscal situation, and a world environment that was boosting India’s gross domestic product performance by an additional 2 per cent annually. Most of UPA-1 economic performance had little to do with its own actions.

History will judge Sinha better despite his run of “bad luck” when he was at North Block. But that is no reason to envy the “oil” bonanza that was part of Jaitley’s mixed inheritance from UPA-2.

If Sinha is today thought of as someone who could have done a better job as finance minister than Jaitley, it is because of his past “karma”, where he did his job to the best of his ability. Jaitley and Narendra Modi are getting their share of bad karma for not acting earlier on bank recapitalisation and for mis-steps in demonetisation and the complicated goods and services tax structure. They now have to put their shoulders to the wheel and get the economy out of the ditch.

Sinha needs to be complimented for telling it like it is, but he did not cover himself with glory in the process by sounding petty and churlish about Jaitley’s “luck”.