Lawyer Seen as India Finance Chief Woos Punjab in First PollUnni Krishnan
As Arun Jaitley sits on stage at a rally for the opposition Bharatiya Janata Party in Punjab, the announcer turns to him and declares: “Please welcome India’s next finance minister.”
Jaitley steps up to the microphone, unfamiliar territory for someone who’s spent more time in courtrooms representing clients such as Coca-Cola Co. and PepsiCo Inc. than on the campaign trail. At 61, the former trade minister who has only held appointed posts is seeking his first win at the ballot box.
With polls showing Narendra Modi’s BJP winning enough seats to form a government after elections ending May 16, Jaitley could soon find himself with control over the nation’s purse strings. His biggest challenge will be lowering borrowing costs and attracting foreign companies to invest in an economy that expanded near the slowest pace in a decade in the last financial year, he said in an interview.
“The political change itself will be the biggest change to investment sentiment,” Jaitley said April 22, while campaigning in Punjab, a state bordering Pakistan. “We will rebuild and recreate the investment cycle and make India an investment destination where it’s easy to do business.”
Though untested in direct elections, Jaitley is popular with investors who see Modi as the best bet to revive Asia’s third-biggest economy. The benchmark S&P BSE Sensex has advanced 14 percent since Sept. 13, when Modi was named a candidate for prime minister, with the rupee rising 4.9 percent. The Sensex fell 0.5 percent as of 10:11 a.m. in Mumbai, while the rupee appreciated 0.2 percent.
Acceptable to Investors
“Jaitley will be 100 percent acceptable to investors,” said Samir Arora, founder of Singapore-based hedge fund Helios Capital Management Pte. “He is close to Mr. Modi, a senior leader, articulate and well-read -- and those work well.”
Even if Jaitley loses in his constituency, he’ll still be eligible for a cabinet post because he’s a member of the upper house of parliament. Still, winning an electoral mandate gives you more clout if you hold one of the government’s top positions, said Sandeep Shastri, director at the Centre for Research in Social Sciences and Education at Jain University in Bengaluru, formerly known as Bangalore.
“Jaitley is someone who is seen as occupying a very important position in that government,” Shastri said. “Your political strength gets further enhanced if you are directly elected.”
Born into a family that migrated to India from Pakistan after the nations were separated in 1947, Jaitley headed his university’s student union while studying to be a lawyer and was a leader of the youth wing of the Rashtriya Swayamsevak Sangh, a Hindu nationalist group aligned with the BJP.
From 1975 to 1977, he was detained for protesting the Congress party’s imposition of emergency rule, during which civil liberties were curbed. Three years later, he joined the BJP at its inception while continuing with his law practice.
Jaitley represented PepsiCo when it took Coca-Cola to court, and then again when the company was fined for painting advertisements onto rocks in the Himalayan range. He counseled Coca-Cola in a later case, and has also appeared for the billionaire Birla family in an inheritance dispute.
At the same time, Jaitley has remained active in politics and international affairs, holding cabinet positions during the BJP-led governments in 1998 and 2004. He led India’s delegation at the World Trade Organization talks in 2003, blocking attempts by developed countries to gain greater access to emerging markets without reducing agricultural subsidies.
Since 2002, Jaitley has become one of Modi’s key strategists while helping to oversee election wins in his home state of Gujarat. Jaitley is now one of Modi’s top defenders, telling international journalists this month that the chief minister doesn’t need to apologize for failing to quell 2002 anti-Muslim riots in the state because courts have cleared him.
“Jaitley will have to follow the thinking of the leader at the top,” said Deven Choksey, managing director of Mumbai-based K.R. Choksey Shares & Securities Pvt., referring to Modi.
A Modi-led government would provide stable policies, Jaitley said in the interview. The government needs to remove supply bottlenecks that are helping to fuel inflation, he said.
Central bank Governor Raghuram Rajan has raised the benchmark repurchase rate 75 basis points since September to 8 percent. He left the rate unchanged on April 1 and said further tightening isn’t anticipated if consumer-price gains stay on path to hit 8 percent in January 2015 and 6 percent a year later. The index rose 8.3 percent in March, official data show.
“Maybe their policy is being guided by the present circumstances, and I won’t make any judgement on them,” Jaitley said when asked about the central bank’s policy. “Higher rates are making the economy sluggish and a competitive economy cannot afford them.”
Building capacity in ports, highways and power, developing townships and focusing on low-cost manufacturing to create jobs will all be priorities for a BJP-led government, he said. Jaitley wants more trade with Pakistan via land routes, which will help convert Amritsar, the biggest city in his constituency, into a trading hub.
While Modi is contesting from Varanasi, Hinduism’s holiest town, Jaitley’s hoping to win in Amritsar, which houses the Golden Temple, Sikhism’s most revered shrine.
Locals in Amritsar, which means “Pool of Ambrosia,” are betting that Jaitley will attract more investment than a candidate focused on more parochial issues. His opponent is the Congress’s Amarinder Singh, a former Punjab chief minister and head of a local royal family.
Away from the sea of colored turbans at Jaitley’s election rally, Surjeet Singh pours cups of freshly brewed tea for a heavy stream of customers. He’s impressed by Jaitley’s stature.
“He will become a senior minister, and that will mean more development to my city,” Singh said, leaning forward to catch a glimpse of Jaitley as his entourage passes by.
Clad in a crisp black waistcoat and the traditional Indian garb of a long white cotton shirt and drawstring pants, Jaitley dismisses all talk of an imminent Cabinet appointment.
“This is good friends giving me a pat on my back,” Jaitley said. “I don’t know what’s in store for us.”