Several recent developments – some bypassing Chidambaram’s authority and others raising public dissent against his action – give rise to suspicion that Congress bigwigs are distancing themselves from the finance minister and his authority is being craftily undermined. Chidambaram, who, for some good reasons, has decided against standing for the next Lok Sabha election, is for all practical purposes looks like an odd-man-out in the decision-shy, slow-paced union cabinet. He could have been offered a Rajya Sabha seat. But, he wasn’t. Next time, things could be less favourable for Congress to nominate him, if at all, for the Upper House.

Congress satraps are believed to be also cut up with the finance minister for initiating an unnecessary criticism of his predecessor for the current poor state of economy and reduced foreign direct investment due to retro-tax and imposing heavy penalties on overseas investors such as Vodafone among others which was promptly retorted at an industry forum in Kolkata last year by the President of India, Pranab Mukherjee, who had earlier held the finance portfolio. Given the deteriorating image of Congress, the least the party could afford ahead of the parliamentary election is to witness a public spat between its finance minister and the President, especially considering a crucial role that the President may be required to play in the case of a hung Parliament and complex political composition of post-poll alliance, many feel. Congress needs the President more than the going finance minister.

Apart from the unusual letter the Congress president cum UPA chairperson shot off to Commerce Minister Anand Sharma seeking duty relaxation for gold import over the head of Chidambaram during the latter’s brief three-day absence from the country, Sachin Pilot’s department of corporate affairs got itself engaged to rewrite the whole rule book disregarding the practice of mandatory submission of cost audit report with audited annual corporate financial accounts before the revenue authorities apparently without even consultations with relevant departments in the finance ministry. Only last year, the finance ministry had notified that the corporate financial accounts submitted to the revenue department must carry cost audit reports for better understanding of the entries in the books of accounts by both direct and indirect tax authorities. It seems that the department of corporate affairs may have been influenced by corporate lobbyists to overrule the existing views of the department of revenue to undermine the role of cost audit though it was not quite known to either the finance minister or the corporate affairs minister.

Much to the discomfort of the finance minister, who had axed a good portion of subsidies in order to contain the government’s fiscal deficit, the Congress high command announced the restoration of subsidy on cooking gas up to 12 cylinders per year per household connection instead of nine to provide additional relief to mainly the middle class consumers. The latest decision to raise dearness allowance by 10 per cent for employees and pensioners of the central government and institutions funded by them too will raise the burden on the central exchequer and put many cash starved states, especially those ruled by the opposition parties which follow DA parity with the Centre for their employees, to great financial difficulties. Additional DA payments to employees and pensioners have been held back by a number of states for want of funds. With election nearing, the party has started doling out goodies almost every week at the cost of the exchequer, struggling to contain fiscal deficit through fiscal austerity.

Many think that the current ‘revolt’ within the government against Chidambaram is being steered by no other than the Union Minister of Rural Development, Jairam Ramesh, who, ironically, was once rehabilitated by Chidambaram himself as his ‘advisor’ during 1996-98 when he held the finance portfolio under the Deve Gowda government. Ramesh was ‘jobless’ then. Ramesh seems to have support of influential Congress leaders, including Vice-President Rahul Gandhi, as his expenditure budget on rural development got hacked by Rs. 15,000 crore by Chidambaram, severely affecting several pro-rural poor and employment generation schemes during this election season.

Ramesh had first written to the Prime Minister, Dr Manmohan Singh, against the ‘unfair’ allotment cut to his ministry by the finance ministry. Later, he chose to send a similar protest letter to the finance minister expressing his displeasure over the steep cut in budgetary allocations for social welfare schemes. The four-page letter, which was leaked out to the media, detailed possible scheme-wise impact due to the steep cut in budgetary allocation. The minister was never reprimanded for the open protest. Ramesh, who also holds the additional charge of the drinking water and sanitation department, said that the allocation cut would affect almost all his ministry’s schemes, most severely the popular Pradhan Mantri Grameen Sadak Yojana (PMGSY) reducing the allocation by Rs. 9,000 crore to Rs 12,700 crore. Funds for the flagship Mahatama Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is cut by Rs. 2,000 crore to Rs 31,000 crore. Similarly, Integrated Water Management Programme, Indira Awas Yojana, Backward Region Grant Fund and National Rural Livelihood Mission will have to make do with lower allocation.

Interestingly, no other minister has chosen to openly condemn the finance ministry’s belt tightening measures including a mandatory 10 per cent cut in non-plan expenditure, excluding interest payment, debt repayment, salaries, pension and the Finance Commission grants to states. An ‘office memo’ issued by the finance ministry’s department of expenditure dated September 18, 2013, listed budget cut also on account of seminars and conferences, purchase of vehicles, domestic and foreign travels, creation of new posts, etc. and called for discipline in fiscal transfers to states, public sector undertakings and autonomous bodies. The sting came in the last part of the order. It said “not more than one-third (33 per cent) of the budget estimates may be spent in the last quarter of the financial year” that is during the current January-March period. What is more, expenditure during March has to be limited within 15 per cent of the budget estimates. The memo also restricted advance payments by departments during March.

However, a stubborn Chidambaram, who is not new to controversy and criticism, is unfazed. Even as a going-man, the finance minister strongly feels that he has a job to do to contain fiscal and current account deficits (CAD) within promised limits. He had already said ‘no’ to liberal gold import till March 31 putting aside pressure from the UPA chairperson. Chidambaram would not like to be blamed by his successor in the next government for economic mismanagement. The lower economic growth rate has led to a lower-than-projected revenue collection rate, necessitating curtailment of budgeted expenditure by nearly Rs. 1,00,000 crore. Ministry officials are resisting the pressure for introduction of new pre-poll schemes, arguing that convention should be followed and any big announcements avoided in the vote on account. (IPA Service)