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India’s Finance Minister Mukherjee to Contest Presidential Poll

Pranab Mukherjee is set to give up his job as India’s finance minister after the ruling Congress party made him its nominee for the post of president.

Mukherjee “has a long and distinguished record of public service spanning over five decades,” Congress President Sonia Gandhi said in announcing the veteran leader’s selection yesterday in New Delhi. “There is broad support for his candidature.”

Support from two regional parties for Mukherjee’s nomination brightened the chances of his elevation to India’s highest constitutional office in the July 19 presidential poll. His departure from the finance ministry may lead to an overhaul of Prime Minister Manmohan Singh’s cabinet as Congress tries to revive an economy growing at the weakest pace in nearly a decade.

The next finance minister is going to have a “very challenging job given the problems of working with coalition allies,” said Rupa Rege Nitsure, an economist at state-owned Bank of Baroda in Mumbai. What’s important for the successor “is de-politicization of economic reforms and to show with conviction that India can take tough decisions to prop up growth,” Nitsure said.

While largely a ceremonial post, the president is the supreme commander of the armed forces and oversees the creation of a government in the event of a hung parliament. Mukherjee, 76, will probably face one or more opposition candidates when elected legislators of state assemblies and the federal parliament vote for the next president.

Policy Paralysis

Paralysis in policy making brought on by corruption charges and infighting within the governing alliance has contributed to growth in India’s economy slumping to a nine-year low. The rupee is Asia’s worst performing currency this quarter as investment has waned, and the country faces becoming the first so-called BRIC nation to lose its investment-grade credit rating, according to Standard & Poor’s.

Mukherjee has been the Congress party’s key troubleshooter in managing conflicts with allies including Mamata Banerjee, leader of Trinamool Congress, who has repeatedly blocked Singh’s attempts to open up the economy to more foreign investment.

He “has the instincts of a conciliator,” said Mohan Guruswamy, chairman of the Centre for Policy Alternatives in New Delhi. “His instincts and responses as finance minister were not in keeping with our requirements right now. He was a bit of a dinosaur. The economy needs someone who will drum up an agenda and push it.”

Potential Successors

Home Minister Palaniappan Chidambaram, Commerce Minister Anand Sharma, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia, Chairman of the Prime Minister’s Economic Advisory Council Chakravarthy Rangarajan and Rural Development Minister Jairam Ramesh are all probable candidates to replace Mukherjee, Business Standard reported yesterday. He may resign on June 24, CNN-IBN television channel said.

The Congress party was routed in state elections earlier this year, including in India’s most populous state, Uttar Pradesh, where the party’s leader-in-waiting, Rahul Gandhi, led the campaign. Yesterday, it suffered defeat in a provincial by- election in Andhra Pradesh state as its breakaway group swept to victory.

Singh’s administration, re-elected in Congress’ biggest win in two decades in 2009, is grappling with a trade deficit that reached a record $184.9 billion in the fiscal year ended March, and an inflation rate of more than 7 percent.

The winner of the presidential vote will succeed President Pratibha Devisingh Patil, whose five-year term ends July 24.

Banerjee’s Opposition

Banerjee, chief minister of West Bengal state, said yesterday she wants former president A.P.J. Abdul Kalam as the candidate. Mulayam Singh Yadav’s Samajwadi Party, which rules Uttar Pradesh, and Mayawati’s Bahujan Samaj Party have said they will support Mukherjee’s candidature.

Heading as many as two dozen ministerial panels on issues ranging from food production to fuel prices, Mukherjee, who is from the eastern state of West Bengal, has rarely been out of the news during Singh’s second term. A consummate political insider, he was often called upon to appease government allies angered by proposed policy changes, not always emerging victorious.

His efforts to get Banerjee to drop her opposition to Singh’s plans to allow foreign retailers including Wal-Mart Stores Inc. into India failed. Similarly, his bid to convince communists then allied with Singh to support a landmark nuclear cooperation agreement with the U.S. was unsuccessful.

Former speaker of the lower house of parliament, Purno A. Sangma, who is backed by two regional parties, is seeking support from others as he considers joining the race for president. The main opposition grouping led by the Bharatiya Janata Party has not announced its nominee.

Mukherjee’s “vast experience in India’s parliamentary system” and the respect he enjoys among lawmakers, will help him be an effective president if he wins the election, said Satish Misra, a political analyst at the New Delhi-based Observer Research Foundation.

To contact the reporters on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net; Andrew MacAskill in New Delhi at amacaskill@bloomberg.net

To contact the editors responsible for this story: Hari Govind at hgovind@bloomberg.net; Peter Hirschberg at phirschberg@bloomberg.net

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