"If the Sensex crosses 8,000 then I think I would be concerned"

Did he think then that anything would come of his return to the party he had first joined in 1970?

P. Chidambaram measures his words carefully. “I don’t think it is any secret that even the Congress party did not think that it would form the government. So, it had never occurred to me that I would be a minister.”

But did he, nevertheless, sit by his phone, anxiously awaiting the invitation to the swearing-in ceremony?

Apparently, yes, he did. But no, he didn’t think he’d get a top job.

“There was speculation in the press that I would get something like the commerce and industry ministries, of which I had some experience,” he says.

Even when he was sworn in as a Cabinet minister, he did not know what his portfolio would be. And, he says, he never thought that he would be finance minister again.

Only later, when Manmohan Singh announced the composition of his Cabinet, did P. Chidambaram realise that he had hit the jackpot. Three months before the announcement, it had seemed unlikely that he would get into Parliament.

Now, he was finance minister of India.

Opening day nerves

We are sitting in the living room of Chidambaram’s ministerial bungalow on Delhi’s Safdarjung Road. It is a simple house — by ministerial standards — and there are no PAs hovering around. A servant opens the door and Chidambaram walks into the room a few minutes later, dressed in his Sunday uniform of casual polo shirt, beige trousers and Bata chappals.

The Chidambaram who appears to own North Block is nowhere in evidence. There is none of that fabled arrogance, the tendency to talk very slowly as though he is addressing small children and the coldness that causes some people to regard him as aloof and distant.

This Chidambaram is warm, chatty, candid and forthcoming. It is as though once you take the minister out of his dhoti, a different man emerges; a regular guy, the sort of man you can sit and have a coffee with.

How did it feel, I ask, to move into North Block again?

The answer, apparently, is that he felt a certain amount of trepidation on his first day at work. He had been led to believe that the economy was in great shape but arrived to discover that there were three major problems. Inflation was on the rise. There was a downturn in investment and the money supply was spiralling out of control.

He met with Manmohan Singh to discuss these problems but by then, a new one had emerged. The stock market greeted the installation of his government with terror and panic. The Sensex went into free fall and economic commentators wrote the government off.

“We decided that our first priority was to restore confidence,” he remembers. “We decided that we would not talk about the problems but would play it cool. The volatility in the stock market was a fire that had to be doused and to draw attention to the problems would have the opposite effect. Of course, we were confident that we could handle the problems and reverse the trends. Which fortunately, we have.”

Does he think now that the market reaction was genuine or does he buy the theory, popular at the time, that manipulators were driving the Sensex down?

“I haven’t seen any evidence of major manipulation,” he concedes. “We have found one or two entities who behaved in a manner that merits investigation. But the rest of it was genuine apprehension.”

Is he surprised at how differently the markets are now behaving, with the Sensex at an all-time high?

“No,” he says, “I think the current level of the indices is equal to the current potential of the economy.” He doesn’t think the market is overheated or that the boom is hollow.

When, I ask, will he begin to get worried? What number would the Sensex have to reach for him to feel that expectations have now overturned reality?

“If the Sensex crosses 8000, then I think that I would be concerned,” he responds.

But then, he adds, “That’s at the current potential of the economy. If growth increases then there’s no reason why the market shouldn’t do even better.”

Moments of disappointment

Is he, I ask, keeping a lower profile? The last time around he seemed a more visible finance minister. This time, he seems to have buried himself in the wood panelling of his North Block office.

“Yes, I am,” he concedes.

What is he afraid of?

“The last time, there was a greater level of comfort because the CPI was part of the government. But now, with the Left supporting us from the outside, there is a whole process of discussion and consultation conducted by other people, outside the finance ministry. So, I try very hard not to cause any offence, to get caught up in any controversy or to do anything that would disrupt the consultation process.”

But he should understand the Left, I tease him. After all, he was, famously, a radical Marxist in his youth and a fiery trade unionist. Even when he joined the Congress in 1970, he went with Indira Gandhi’s version, which was a Left-supported socialist party.

“I still believe in socialist objectives,” he insists, slightly defensively. “I was an active trade unionist till as late as 1978. The difference between me and the Left is that I no longer believe that socialist methods can help us reach those socialist objectives.”

So how does he plan to reach those goals?

“All over Europe,” he says, “the model they follow is that you use market methods to be able to guarantee such socialist objectives as health, education, and other social welfare measures.”

Does it worry him that so many people in the Left seem to regard him as a dangerously capitalistic reformer?

“I wouldn’t use the word worry,” he says. “But there have been moments of great disappointment.”

He was very disappointed when there was a controversy over the introduction of the pensions bill. He felt that the case for reform of the pension system was intellectually and economically unassailable. But, of course, the Left didn’t agree and Chidambaram took it badly.

What about his relationship with Manmohan Singh? The last time he was finance minister, Manmohan Singh was his immediate predecessor and Dr Singh is a hard act to follow.

“The last time I would always think before doing something important, ‘What would Dr Manmohan Singh have done in my place?’. It was also that he was in Opposition and I knew that he would be able to spot the flaws in anything that I had done. This time around, I have a comfort factor. He’s my boss and he’s always there for me to consult.”

Do the two men meet often?

“During the Budget, we would meet about seven or eight times in a ten-day period. Now, we have formal meetings about twice or thrice a month when we talk to each other on a one-on-one basis. But we are on so many committees together that we are always meeting and then, there are the informal meetings: say a five-minute chat before the CCEA (Cabinet Committee on Economic Affairs) or a ten-minute meeting before he meets the Left leaders.”

What kind of things do they talk about?

“Well, I always take his advice on monetary policy. He’s been Governor of the Reserve Bank and he’s an economist which, let’s face it, I am not. During the Budget, we discussed taxation. And whenever there is a problem, I know I can go to him.”

No rivalries, then?

Chidambaram laughs. “No, no,” he says, “He’s my boss. I’m hardly his rival.”