Ever since she took office in May 2019 as India’s first full-time woman finance minister and presented her first Budget just weeks thereafter, Nirmala Sitharaman has been beset with rumours about being moved out of this important ministry in a cabinet reshuffle that was always touted as imminently due.
This week, Sitharaman presented her third Budget. In doing so, she has silenced most of her critics and also quelled all the rumours of her being shunted out as she made some big bang announcements that, if followed through in spirit, will classify Budget 2021-22 as a dream Budget that delivered on several important reform measures.
For a bold Budget that had many firsts, including proposals for some aggressive asset sales, Nirmala Sitharaman is ThePrint’s Newsmaker of the Week.
Free thinker from JNU with ‘Right of centre’ Budget
Sitharaman, who is an alumni of Jawaharlal Nehru University (JNU) and considered herself a free thinker during her college days, presented what can be best described as a ‘true Right Budget’.
Among all the major announcements in the Budget, three stand out for their boldness. The stated intent to privatise many state-owned firms, a couple of banks and one insurance company is perhaps the most ambitious plan laid out since the early 2000s, when the Atal Bihari Vajpayee government was successful in privatising a few public sector companies.
It’s a marked shift from the previous Budgets of the Narendra Modi government.
The decision to raise foreign direct investment (FDI) in insurance to 74 per cent from 49 per cent and allowing foreign ownership and control is unprecedented given the long-term sensitive nature of the business.
In addition, the desire for fiscal transparency by bringing most off-Budget borrowings into the government’s books that led to India’s fiscal deficit just short of double digits has ensured that Sitharaman’s third Budget will be considered a reform-enhancing one in the coming years.
In fact, Budget 2021-22 has the potential to be in the august company of other landmark Budgets like the 1991-92 Budget of Manmohan Singh and the 1997-98 Budget of P. Chidambaram.
Face of Modi govt’s Covid-19 battle
This Budget was also unlike others because it has come at a time when the Indian economy is expected to register a record contraction due to the Covid-19 pandemic.
It was one of the most challenging times for Nirmala Sitharaman as the Modi government tried to formulate an economic response with limited funds and without any clarity on how long the pandemic situation would last. The open fight with the states over payment of goods and services tax (GST) compensation didn’t help the government win the perception battle either.
Sitharaman emerged as the face of the Modi government’s response to the pandemic, presenting five ‘mini-Budgets’ in 2020 that were a mix of reforms and immediate support in cash and kind for the most vulnerable.
The pandemic and the resultant clamour for increased fiscal spending also presented an opportunity to shed the baggage of previous years — especially in the case of accounting for food subside expenditure — and start with a clean slate. Sitharaman hasn’t let that opportunity go waste.
She steered clear of controversial announcements and did not introduce any new taxes or increase the compliance burden on taxpayers. Nor were there any nasty surprises in the fine print.
Clearly, the finance minister tried to implement the learnings from her past two Budgets.
What is also different this time around is that Sitharaman is supported by bureaucrats like expenditure secretary T.V. Somanathan and economic affairs secretary Tarun Bajaj who enjoy the trust of both the minister and the Prime Minister’s Office, courtesy their stints in the PMO.
Silencing the critics
Sitharaman assumed charge as India’s first woman finance minister on 31 May 2019 after a difficult stint as the first full-time woman defence minister of the country. As the finance minister, she was instantly greeted with bad news on two important fronts — the economy was witnessing a sharp slowdown and unemployment was emerging as a major challenge for the Modi government, which had promised massive job creation for the youth as part of its election plank.
A few weeks later, she presented her first Budget on 5 July. But it was nothing short of controversial, with proposals like super rich tax on foreign portfolio investors and an announcement that India will borrow in foreign currency denominated bonds from the overseas market. The backlash from various stakeholders was so strong that the government was forced to withdraw the first and put the brakes on the other, increasing the spotlight on Sitharaman’s performance as the finance minister. These overshadowed a major announcement made by her — a massive cut in corporate taxes that made India competitive.
Sitharaman’s tenure as the finance minister has not been free of controversy, just like her stint as the defence minister. She has often been at the receiving end of criticism of vocal BJP MP Subramanian Swamy. A leaked audio of her publicly berating the State Bank of India chairman at a meeting in Assam and calling the bank “heartless” went viral and turned the spotlight on her brusqueness with officials and previous run-ins including the one with a Karnataka minister.
But the criticisms Sitharaman faced weren’t always due to her performance. Some of it has been due to her gender — prominent in how she is routinely dubbed as ‘tai (aunty)’ or is attacked (even in Parliament) over her appearance or her demeanour, which is often judged as that of an ‘angry’ person.
Some of Sitharaman’s ill-timed comments — like the one made during a Parliament debate on onion prices — did not help her public image either.
But Sitharaman has a golden opportunity to consign all these issues to the past. Budget 2021-22 will silence most of her critics even as many will continue speculating on whether the author of the Budget speech was someone other than Sitharaman.
But Nirmala Sitharaman sought to set the record straight. “I wrote the Budget speech myself,” she said in an interview to The Times of India.
Going ahead, implementation of this year’s announcements, especially the one related to widespread privatisation, in the same true spirit that they have been envisaged, will determine how history remembers Budget 2021-22 and Nirmala Sitharaman’s stint as the first full-time woman finance minister of India.
Views are personal.