 "Finance Secretary T V Somanathan")
Union Finance secretary T V Somanathan on Tuesday said independence of central banks, whether law enforcement actions are political or not and if finance ministers should be politicians or experts are among the issues that governments have been grappling with for decades.
Participating in the book launch of ‘India’s Finance Ministers: From Independence to Emergency’ by Business Standard Editorial Director A K Bhattacharya, Somanathan said this was a very valuable work for both people who were in the economic present and those who were studying the economic past. “For me, the most interesting learning from this book is that the issues of the modern era are not very modern. In fact, they are the old issues that all people in the finance ministry used to face,” he added.
Somanathan said while institutions such as the Reserve Bank of India, State Bank of India and World Bank, had documented “official history’’, there was no such for the finance ministry. “This book is so good that I think it actually functions almost like an official history of the finance ministry through its coverage of the finance ministers between 1947 and 1977. It is, however, different from an official history in as much as it is more objective than most official histories are,” he added.
Speaking during a panel discussion at the book launch, chief economic advisor in the finance ministry, V Anantha Nageswaran, agreed that the book could be called the history of the finance ministry. “This brings out in great detail with enormous insight how the model of government being in the driver's seat went to excessive limits. The fact that the book stops at 1977 is
interesting because post-1980s, the world changed. Globalisation became the norm and India also actually began its slow liberalisation process,” he added.
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Shankar Acharya, former chief economic advisor in the finance ministry, said he learnt from the book that the import restrictions which became a policy focus in 1960, 70s and 80s was first mentioned in the first Budget of independent India by finance minister Shanmukham Chetty, who classified imports into free, restricted and prohibited. “There was continuous pattern of increasing import duty both for reasons of revenue and for protectionism. Most of these have been reversed except for some recent years,” he added.
Former Planning Commission deputy chairman Montek Singh Ahluwalia said the book made it clear that the speeches by finance ministers were so formula-driven that they were almost useless. “It will be quite interesting to get some students to examine whether there has been any significant departure in the speeches of finance ministers. Manmohan Singh’s Budget speech in 1991 didn’t talk about the Budget. Virtually, every important thing that was done in 1991 was done before the Budget. So the Budget speech was a rationalisation of the case for economic reforms,” he added.
Former chief economic advisor in the finance ministry Nitin Desai said intensity of control in the Jawaharlal Nehru era was less. He referred at length to the relationship between prime ministers and finance ministers. “There was no ideology that dominated economic policy making,” he pointed out.
