Prime Minister Singh has assigned a senior Congress leader to placate the President, who is upset with Finance Minister P Chidambaram, reports Anita Katyal.
Prime Minister Manmohan Singh and Congress President Sonia Gandhi are concerned over the ongoing spat between President Pranab Mukherjee and Finance Minister P Chidambaram.
The President is said to be angry with Chidambaram’s repeated statements in Parliament and outside blaming Mukherjee’s policy decisions as finance minister for the current state of the economy.
What upset Mukherjee even more was that Chidambaram’s statement in Parliament was made in the prime minister's presence.
Not only has the President hit back at Chidambaram publicly, he has conveyed his unhappiness to the prime minister and the Congress president.
Dr Singh assigned a senior Congress leader to mollify the President while Sonia Gandhi too has made efforts to placate Mukherjee, who was the government’s key troubleshooter before he took up residence in Rashtrapati Bhavan.
There is another reason the Congress leadership does not wish to annoy the President.
Given the projections for the 2014 Lok Sabha election, President Mukherjee will play a crucial role in the formation of the next government.
Mukherjee is considered to be a copybook President, who follows the Constitution and precedent in letter and spirit. Still, the Congress would not like to be on his wrong side.
The President’s office is learnt to have communicated to the government that it is incorrect to blame him for the country’s economic ills as all decisions were taken by the Union Cabinet collectively.
It was pointed out that the prime minister had endorsed the budgetary proposals at a Cabinet meeting that was attended by Chidambaram.
It has also been pointed out that the prime minister had briefly handled the finance ministry after Chidambaram was made home minister following the Mumbai terror attacks in November 2008.
The two stimulus packages announced in December 2008 and early January 2009 were announced when the prime minister handled the finance ministry.
Mukherjee took over the finance ministry on January 24, 2009, and had less than a month to present an interim Budget.
The bulk of the preparations for this budget had been undertaken before Mukherjee took over as finance minister, it has been argued.
Chidambaram has maintained that the stimulus packages in 2008-2009 to provide protection from the global economic recession, the reduction in export and import duties and increased government spending all contributed to the high deficit.
While replying to a debate on the state of the economy in the Rajya Sabha during the monsoon session of Parliament, the finance minister pointed out that in addition to external factors, certain domestic problems were also responsible for the country’s tottering economy today.
'There are not just external factors, there are also domestic factors. One of the domestic factors is that we allowed the fiscal deficit to be breached and we allowed the current account deficit to swell because of certain decisions that we took during the period 2009 to 2011,' explained Chidambaram, who returned to the finance ministry in August last year after Mukerjee was elected President.
'It (the fiscal stimulus) brought us growth, it stabilised the economy. We swayed off the very serious consequences of the 2008 collapse of the US economy. But it cost us in terms of fiscal deficit and current account deficit,' Chidambaram pointed out, adding that he realised he had a tough task on hand when he returned to the finance ministry last year.
'The fiscal deficit limits had been breached. In fact, the budget estimates were awry. The current account deficit had swelled,' he underlined.
With Chidambaram blaming his predecessor for the present economic mess, the President took the unusual step of taking on the finance minister in public.
Addressing the Bengal Chamber of Commerce last week, Mukherjee deviated from his written speech to tick off Chidambaram. He began by pointing out, 'The President doesn't have the privilege to air his views. The President of India is not a policy maker, but I will take this opportunity to air some of my observations about the Indian economy.'
Mukherjee then went on to state: 'In 2008-2009, the GDP growth came down; there was improvement in 2009-2010 and 2010-2011. Now, again there is a slump.'
The President did not name anyone for this downturn, but he did point out that the GDP growth had slowed down from 9 per cent to 6.6 per cent during 2008-2009 because of the global economic recession, but had improved subsequently.
With the President pulling no punches in responding to Chidambaram’s statements, the finance minister was forced to issue a clarification that it was not his intention to blame any individual, but the entire government for the policy decisions.
The finance minister’s clarification, however, is unlikely to be accepted at face value by the President given their rocky relationship.
The simmering tension between the two men came to the fore exactly two years ago when the finance ministry sought to implicate Chidambaram in the 2G spectrum row. Mukherjee was then forced to offer a public explanation, something the President will not forget in a hurry.