Pranab quits as minister to run for presidency

Agencies/New Delhi

Pranab Mukherjee addresses journalists as he leaves his office on his last day as the finance minister in New Delhi yesterday

Finance Minister Pranab Mukherjee formally resigned yesterday, leaving behind a faltering economy and a plunging rupee as he sets his sights on the country’s presidency. “Today, I stand ready to embark on a new journey...I am leaving behind my life as a political activist spanning over four decades,” Mukherjee told reporters outside his office before submitting his resignation to Prime Minister Manmohan Singh.Mukherjee said besides the UPA partners, he enjoyed the support of several regional parties including the Samajwadi Party, the Bahujan Samaj Party and the Janta Dal (United). “I feel humbled by the support,” he said. “I know that not every decision which I have taken might have been right but I have taken those decisions keeping in view the interests of the people.” The 77-year-old veteran politician leaves office at a time of growing criticism of his stewardship of Asia’s third-largest economy, which has slowed dramatically at a time of stubbornly high inflation. His last full day as finance minister coincided with the announcement on Monday of measures to boost the rupee, which has lost nearly a quarter of its value in the past year and hit a record low of 57.32 against the dollar last week. The steps included raising the limit on foreign investment in government bonds by $5bn to $20bn, but the markets were underwhelmed and both the Indian currency and Mumbai’s Sensex index fell on the announcement. Mukherjee, the ruling United Progressive Alliance’s pick for next month’s presidential poll, told reporters he will file nomination papers for the election tomorrow. The government has yet to announce who will succeed him or whether the prime minister will keep the portfolio as he tries to revive the economy. Mukherjee departs with the government projecting record borrowing to plug its budget deficit and as political gridlock hampers efforts to spur investment and ease bottlenecks stoking elevated inflation. “Given the challenging global environment during his tenure, Mukherjee has done a decent job, and made incremental progress where fiscal consolidation is concerned,” said Vishnu Varathan, an economist at Mizuho Corporate Bank Ltd in Singapore. “A lot more could have been done, but one has to be mindful of political processes involved which make ground-breaking changes a lot tougher.” The rupee was little changed yesterday at 57.035 per dollar at the close in Mumbai. It is down about 21% in the past year, the worst slide among major Asian currencies. Aside from India’s deteriorating outlook, the rupee has also been hurt by Europe’s debt crisis, which has sapped demand for emerging-market assets. Mukherjee, 76, entered parliament in 1969 after working as a teacher and journalist. He had stints in charge of India’s foreign, defence, commerce and steel ministries and ran a closed economy as finance minister from 1982 to 1984. 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 newspaper reported on June 15. Asia’s third-largest economy expanded 5.3% last quarter from a year earlier, the weakest pace in nine years. Prime Minister Singh aims for 9% annual gains to cut poverty. The government’s recent setbacks include the suspension in December of plans to allow foreign companies such as Wal-Mart Stores Inc to open supermarkets after The Trinamool Congress, a key ally of the ruling coalition objected. India has also foregone investment in the pension and insurance industries in recent months. Swedish furniture retailer IKEA last week eased some of the gloom, saying it wants to open stores in India and may invest as much as €1.5bn ($1.9bn). Coca-Cola Company said yesterday the company and its local partners plan to spend $5bn in the country by 2020. “It’s a very messy combination of things that is going on in the economy,” said Robert Prior-Wandesforde, Singapore-based director of Asian economics at Credit Suisse Group AG. The next finance minister will need to improve public finances by raising fuel prices and push forward with other reforms, such as introducing a goods and services tax, he said.