CHIEF NEGOTIATOR
ARUN JAITLEY, 65
The main architect of the first major tax reform since Independence, the Goods and Services Tax, has also deftly managed the aftermath of demonetisation
On November 29, amidst the heat and dust of Gujarat elections, finance minister Arun Jaitley received a call from Prime Minister Narendra Modi on a blog the former had written on the insolvency law the day before. The blog post—The Fiction of Loan Waiver to Capitalists—sought to counter the criticism that the government could waive loans of capitalists. The PM was obviously intrigued by the FM’s arguments and wanted him to elaborate. Jaitley, Union minister for finance and corporate affairs, wears many hats as a BJP leader and a senior minister who has been in charge of key elections, one of the few to be consulted on cabinet reshuffles, the only minister to be given two heavyweight portfolios (until recently he handled finance and defence) and, most importantly, the man at the forefront of reforms that form the cornerstone of the Narendra Modi-led government.
The year 2017 would be remembered as one of the most significant years in India’s economic history, when the government introduced fundamental structural changes in the economy and Jaitley fronted them all. Whether it was expanding Aadhaar to other services, rationalising subsidies to reach targeted users, driving consensus on the Goods and Services Tax
(GST), managing the tailwinds of demonetisation, or powering the $32.43 billion bank recapitalisation plan, there have been no easy days for Jaitley in 2017. There are several opinions on what he could have done better in the year, but many economists concur that he didn’t do anything ‘wrong’.
His colleagues in the finance ministry cite his ability to work with bureaucrats and to always look at the big picture. While his predecessor P. Chidambaram was considered ‘very sharp’, he got too caught up with the nitty gritty and made bureaucrats overly cautious. As a lawyer, Jaitley’s negotiation skills are all too well known. In December 2017, while negotiating the GST with the empowered committee of state finance ministers, he followed a give-and-take strategy—a key official present at the meeting told india today that Jaitley at no point deviated from the non-negotiables, but at the same time was open to finding a way out. There was immense pressure on him from the states to keep petroleum and petroleum products out of GST but, ultimately, Jaitley convinced the states to include these in the GST; though he left it to the GST Council to decide the date of inclusion. But he did push through India’s singlemost important tax reform since Independence, bringing the country under a unified tax regime, even if its implementation left much to be desired.
Politics apart, Jaitley had the benefit of falling oil prices reducing the oil subsidy bill; this helped India’s macro-economic indicators such as inflation, current account deficit and trade balance. But Jaitley was also at the helm of a slowing economy—five quarters of slowing growth, even as retail inflation soared to a 15-month high of 4.88 per cent in November.
“I think if we look back, this year there are several important structural changes that got initiated or implemented. In GST, two more challenges remain—procedural simplification and double checking to ensure that evasion doesn’t take place,” Jaitley told india today (see interview), reflecting on the year gone by. Of course, his work has become only more challenging. The next step is to ensure the smooth implementation of the insolvency code, ironing out further wrinkles in GST, taking the bank recapitalisation process to its logical conclusion and making India grow.
At no point did Jaitley deviate from the nonnegotiables, but was open to finding a way out on GST