THE RACE TO THE TOP OF BANK STREET

The other’s who could not make it

By Neeraj Mahajan

In was always a musical chair contest between Chief Economic Advisor Raghuram Rajan and the others including SEBI Chairman UK Sinha, RBI deputy governor Urjit Patel, Planning Commission member Saumitra Chaudhuri and Secretary Economic Affairs Arvind Mayaram. If none of them made it, Planning Commission deputy chairman Montek Singh Ahluwalia a friend of the prime minister who is consulted by the PM on important policy decisions was to play the role of night watchman.

Raghuram Rajan of course was the first choice. After him if anyone who could stake claims for the post on merits, it was Arvind Mayaram.

ARVIND MAYARAM

A plus point in favor of this 58 year 1978 batch Rajasthan cadre IAS officer was that he understands the intricacies of the Indian economy and small farmers at the grass root level. As the secretary economic affairs since last August and heading a committee on foreign investment, he has played a key role in shaping economic policy. He is a career bureaucrat who has had a long tenure at the finance ministry.

STRENGTHS:

He is one of the government’s ace trouble shooters and economic commando whose job is to bring foreign investment in India. He has been part of the process to form foreign investment policy, public private partnerships in core infrastructure such as power, roads, ports, airports and urban development, national policies in energy sectors such as petroleum, petro-chemicals (including pharmaceuticals), coal, non-conventional energy sources legal and institutional framework for investment in Tourism. He enjoys FM Chidambaram's confidence and has the support of the IAS lobby. 

WEAKNESSES:

Mayaram himself might not like to lose his foothold in Delhi and move to Mumbai particularly at a time when there is so much happening. For instance he is tipped to be the finance secretary next March in terms of seniority. And if there are no drastic surprises, he could be the all powerful Cabinet Secretary of India after Ajit Kumar Seth retires or when his successor retires in 2016.  It is the ultimate dream of any bureaucrat to work as Cabinet Secretary directly under the Prime Minister and sign on all policy matters of the government of India. Cabinet Secretary Seth, a 1974 batch Uttar Pradesh cadre IAS officer has got one year extension.  But in a world where nothing can be taken for granted, Mayaram’s own best interest lies retaining his hold in Delhi rather than moving out to Mumbai.

UK SINHA

SEBI chairman Upendra Kumar Sinha a former 1976 batch Indian Administrative Services (IAS) Bihar Cadre officer was the proverbial dark horse who might not have won but could upset the apple cart of many a deserving candidates thanks to his lobbying abilities. By far one of the most controversial figures in the Indian financial sector, he was reportedly banking on the support of President Pranab Mukerjee and Bihar Chief Minister Nitish Kumar – to lobby for him.

STRENGTHS: 

Sinha’s experience in financial sector includes chairmanship of the stock market regulator (Sebi) as well as UTI Asset Management Company India's fourth-largest fund house. He spearheaded several initiatives like Banking Sector reforms and Capital Market reforms during his tenure at the Ministry of Finance. As a Joint Secretary in the Ministry of Finance he looked after Capital Markets, External Commercial Borrowings, Banking, Currency and Coins.

WEAKNESS:

Sinha took voluntary retirement ago in 2008. His career profile in the five years since he voluntarily retired as joint secretary in charge of the capital markets division in the finance ministry is pock-marked with controversies and scandals. First U.K. Sinha moved to UTI Asset Management Company commonly referred to as UTI Mutual Fund in November 2005 on as deputation Additional Secretary to the Government of India bypassing others with the help of Omita Paul who was then advisor to Finance Minister Omita Paul. Sinha’s contribution as the head of UTI which at that time was the largest fund house in the country with nearly Rs 25,000 crore in assets under management (AUM) was that UTI had slipped to the fourth spot in February 2011 when he left. After he left Omita Paul, the powerful advisor to Pranab Mukherjee allegedly tried to plant Jitesh Khosla an IAS officer in the list submitted by professional headhunting firm--Egon Zehnder asked to identify a potential CEO to replace UK Sinha. Khosla who initially did not figure in the shortlisted candidates is Omita Paul’s brother.

Interestingly while at SEBI Sinha reportedly managed to reward himself with unheard emoluments of over Rs four crores per annum by declaring the post of the CMD as commercial appointment. It is a different story that UTI was ideally not in a position to pay such emolument which in any case was way above the highest salary paid to any government or public servant. 

Meanwhile Omita Paul, who was now Secretary to the President reportedly made the right moves to ensure that Sebi chief C B Bhave who was due to retire on February 17,  2011 did not get an extension and thus cleared the path for Sinha to take over as the 8th Chairman of the Securities and Exchange Board of India (SEBI). It is alleged that both UK Sinha and Omita Paul were handling the dirty tricks department during Pranab Mukherjee tenure as Union Minister for Finance and allegedly used their powers to reportedly go soft thus favor conglomerates like Sahara, reliance and Jignesh Shah’s MCX in a number of high-profile cases.  This was corroborated when UK Sinha’s second in command, SEBI Board member as well as head of Sebi's market surveillance and investigation division Kandathil Mathew Abraham  a former finance secretary in the Kerala government — wrote to the Prime Minister on 16 May alleging the hand in glove deals to benefit influential businessmen like Jignesh Shah.

DR. URJIT PATEL

An old hand with ample experience at Boston Consulting Group, International Monetary Fund (IMF) and finance ministry's economic affairs department Urjit Patel, became deputy governor for a period of three years from January 11, 2013. He forms the quartet of Deputy Governors with Dr. K. C. Chakrabarty, Anand Sinha and Harun R. Khan.

STRENGTHS:

Prior to his appointment Patel has been a consultant to the Ministry of Finance, Department of Economic Affairs. He was with IMF and worked on the U.S., India, Bahamas and Myanmar desks. On deputation from the IMF to Reserve Bank he advised on development of the debt market, banking sector reforms, pension fund reforms, real exchange rate targeting and evolution of the foreign exchange market. He was on the Task Force on Direct Taxes, Competition Commission of India, Prime Minister’s Task Force on Infrastructure, Group of Ministers on Telecom Matters, Committee on Civil Aviation Reforms, Ministry of Power’s Expert Group on State Electricity Boards and High Level Expert Group for Civil & Defense Services Pension System, Government of India.

WEAKNESS:

Two things go against him. One -- his previous assignments include working as President (Business Development), Reliance Industries Limited. Two - Born on October 28, 1963, Patel has spent more than half his life outside India. He did his Ph.D. (Economics) from Yale University and M. Phil. from Oxford and has been a non resident Senior Fellow at The Brookings Institution since 2009. This means he hardly got time to understand India.

SAUMITRA CHAUDHURI,

Saumitra Chaudhuri, 59 an economist by training has been working at the Planning Commission since the last four years. He is also a member of the Economic Advisory Council to the Prime Minister.

STRENGTHS: 

A close confidante of Montek Singh Ahluwalia, Chaudhuri in his own right is an expert on industry, financial sector & fiscal policy and has all the qualities that an RBI Governor should have

WEAKNESS:

Being capable is one thing, being pliable altogether different. A thinking person, he may not like being his masters voice on important issues like bank licensing.

SUMIT BOSE

Sumit Bose 58: A 1976 batch IAS officer from Madhya Pradesh cadre, former Expenditure secretary, now revenue secretary Sumit Bose has been Secretary 13th Finance Commission headed by Vijay Kelkar for nearly two years. He headed the disinvestment department in the finance ministry at a time when the government was launching a programme to mop up major funds by selling its stakes in profitable PSUs. He has the backing of Finance Minister Chidambaram who made him trade places with R.S. Gujral who was moved to the Department of Expenditure as Expenditure Secretary in what is billed to be the biggest and most high-profile bureaucratic swap since P. Chidambaram took charge as finance minister.

STRENGTHS:

Bose is a serious contender to be the next cabinet secretary after Ajit Seth retires. He is among the senior most IAS officer in the country today. A student of social policy, he is non-controversial and understands economic issues.  An expert on taxation matters, he has been brought in to streamline the tax policy and the Revenue Department which had ruffled many feathers under RS Gujral - Pranab Mukherjee days

WEAKNESSES:

There is so much going for him to divert his attention elsewhere. As the senior most among all secretaries in the finance ministry Bose was tipped to become the next finance secretary after Sunil Mitra retired but RS Gujral 1976 batch Haryana cadre IAS managed to clinch the coveted North Block post. All hope is not lost for Bose who is due to retire in March 2014 as he still has to stake claim for the finance secretary’s post when Gujral retires in November 2013. All the three who could have made it Gujral, R Gopalan and Bose were batch mates but Gopalan retired in April 2012 leaving the two to fight it out.

ADARSH KISHORE

Adarsh Kishore, A 1969-batch IAS officer from Rajasthan cadre, Kishore was tipped to become cabinet secretary but could not make it when B K Chaturvedi's term was extended by one year. 

STRENGTHS:

He’s been finance secretary and executive director at IMF. Dr Kishore served as the Non Executive Chairman of AXIS Bank Limited, Independent Director of Havells India Ltd and serves as a Member of Advisory Board at Chartered Finance Management Ltd. 

WEAKNESS:

He was not a very serious contender.

RAKESH MOHAN

Rakesh Mohan: a two time deputy Governor of RBI, though he is not a civil servant Rakesh Mohan has held sway over North Block as secretary, department of economic affairs. He was chief economic adviser to when Yashwant Sinha was the finance minister. Mohan has been Chairman, National Transport Development Policy Committee, in the rank of Minister of State and Member, Economic Advisory Council to Prime Minister, Member, Telecom Regulatory Authority, Member of the National Security Advisory Board, Member of the Tariff Authority of Major Ports, and Member, SEBI. 

STRENGTHS:

He is one of the senior-most economic policy makers. Rakesh Mohan Committee Report on Infrastructure was a landmark document on economic policy. His greatest advantage is that he is an insider who knows the organization well. If he is made the governor, he will follow the tradition of Reddy and Rangarajan-- both were deputy governor before moving to the corner room. He joined the Planning Commission as a senior consultant, at a time when Manmohan Singh was a member. He was also being considered as possible successor when Y V Reddy retired in September 2008. He is the first deputy governor born after India’s independence in 1947. A Chidambaram confidant -- he along with D. Swarup, Sanjiv Misra, Dr. Ashok Lahiri and K. M Chandreshekar have bailed Chidambaram out of many an economic crisis.  

WEAKNESS:

Like he quit RBI to take up an assignment at the Stanford University what is the guarantee that he will not do so again if and when the opportunity arises. Mohan received his B.A. in Economics from Yale University and his M.A. and Ph.D. in Economics from Princeton University. Like others he too is too western in his outlook having done most of his studies abroad starting with Electrical Engineering from Imperial College of Science and Technology, University of London. 

MONTEK SINGH AHLUWALIA:

The Planning Commission Deputy chairman may become a serious contender if and only if no other suitable person can be found. The only hitch in this case is that being Chairman,  Planning Commission, he is equal to a cabinet minister while the RBI governor is of the rank of a state minister. Hence the government may either have to upgrade the rank of RBI governor or make Ahluwalia step down.

STRENGTHS:

An old family friend of Manmohan Singh- he and his wife Isher Judge Ahluwalia are one of the very few who can walk into the Prime Ministers house –even wake him up in his sleep. Though he lost the chance to be finance minister after Mukherjee became President because he did not have the backing of any political party – his views matter to Manmohan Singh more than anyone in the Finance Ministry. Ahluwalia who has also served at IMF and world bank was one of the strongest contender for the governor’s post when Dr Bimal Jalan a distinguished economist took over as head of Reserve Bank of India from Chakravarti Rangarajan, who moved out as Governor of Andhra Pradesh. It was a three cornered contest between Montek Singh Ahluwalia, Dr Bimal Jalan and Planning Commission member Arjun Sengupta. Dr Jalan a close confidante of Prime Minister V P Singh was then Planning Commission member-secretary. He had the support of Prime Minister Inder Kumar Gujral. Even Madhu Dandavate then deputy chairman supported the move saying, “usually defeated politicians are given the governors job”. Montek Singh Ahluwalia then finance secretary was supported by finance minister P Chidambaram. Sengupta was backed by Pranab Mukherjee. NDA Chairman Chandrababu Naidu has made life miserable for Gujral and home minister Indrajit Gupta asking them to immediately send Rangarajan – an economist as Governor to Andhra Pradesh which was poised to take off as investment and industrial destination. So the moment Congress president Sitaram Kesri and West Bengal Chief Minister Jyoti Basu gave a green signal, PM Gujral without any hesitation announced Jalan as the consensus candidate and Ahluwalia lost out.

WEAKNESS:

Like a typical foreign returned economist who sounds good in theory, Montek Singh Ahluwalia who spent whopping Rs. 35 lacs to renovate two blocks of toilets seems to have no idea about how the people of India live. The planning commission's poverty line is totally unrealistic. As a result of faulty economic theories the gap in the graph between rich and poor is widening.

(To be continued)