Montek playing key role in finance ministry policy matters

For more than a month and a half, the North Block has been without a full-fledged finance minister. But the ministry has been functioning as if nothing has changed, except that key decisions on its policy proposals are mooted and cleared by either the Planning Commission or the Prime Minister’s Office.

After the Mumbai terror attacks, P Chidambaram, then finance minister, took charge of the home ministry to revamp the internal security situation. At that time, there were reports that the government was looking at appointing a new finance minister, but it did not happen.

With the prime minister holding additional charge of the finance ministry, four senior government officials told Business Standard that Montek Singh Ahluwalia, deputy chairman of the Planning Commission, played a critical role in shaping the two fiscal stimulus packages that were announced by the government to tackle the global financial crisis, especially the second one announced earlier this month. At the same time, non-policy issues requiring the finance ministry’s comment or approval have to obtain the green signal from the South Block, where the PMO is situated.

“When the draft was prepared for the second stimulus package, Montek made extensive notation on the various proposals,” said a senior official in the PMO, adding, “Before the final package was announced, there was regular consultation between the PMO and the Planning Commission deputy chairman.”

When asked about information on the second stimulus package, officials from the department of financial services and other departments used to respond by saying that everything was being finalised in the Planning Commission and they were just giving inputs.

Though this might indicate towards a larger role played by Ahluwalia in the finance ministry, North Block officials say that file movement has not changed after Chidambaram moved out of the North Block. “There is not much change in the administrative matters, the way work moves within the ministry (finance),” said a finance ministry official.

This is also corroborated by a PMO official who says that it is the cabinet secretary who is coordinating the movement of files from the finance ministry.

Under normal circumstance, only the state finance division (called Plan Finance I), within the department of expenditure interacts closely with the Planning Commission to assess the financial resources for the Plan period. With less than four months to go for the general elections and the government planning to present a vote-on-account in February, there are not many policy decisions to be taken and only administrative and routine matters are decided.

A company official, who had approached the Planning Commission deputy chairman for a pending clearance, said it was difficult for Ahluwalia to handle the day-to-day functioning of the finance ministry without a formal authority.

When a state-owned financial institution, which was allowed by the government to issue a tax-free debt instrument as part of the first stimulus package, did not get clearance from the tax authorities for more than a month, it sought Ahluwalia’s intervention but he was not able to help.

There is a consensus among the officials contacted for this report that the government is engaging Ahluwalia in the policy process, without giving him much authority to exercise administrative control over the North Block officials.