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Sep 10, 2012, 12.11 PM IST
P Chidambaram has a simple message for investors disillusioned by India's policy drift: it is no longer 'business as usual' in the corridors of North Block, the sandstone colonial building that houses the finance ministry in New Delhi.
For months, critics have accused Prime Minister Manmohan Singh's government of being asleep at the wheel. Frustrated investors accuse it of both over-confidence and complacency in the face of an economic slowdown that has shattered the country's reputation as 'Incredible India'.
"We have come to a stage where something concrete has to happen," said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai. "The current period is very, very critical for India."
But in the 41 days since his appointment as finance minister - for a third time - Chidambaram has shaken up the ministry and impressed analysts. He has sought to signal that Asia's third-largest economy finally has someone willing to take tough decisions.
Several officials, who asked to remain anonymous, said there had been considerable change in the finance ministry, where Chidambaram was working to shake off the dithering seeping down from policy-makers. In a series of interviews, they described him as a no-nonsense man who is constantly questioning, hands-on, meticulous and intolerant of people who could not manage their time.
India's economic policy-making has been blocked for months by confusion, mis-steps and political gridlock. While the timing of big-bang reforms remains uncertain, the Harvard-educated Chidambaram is trying to work around bickering politicians and is drawing up a package of smaller measures to stop the rot, such as improving tax collection, fast-tracking stalled infrastructure projects and asking state banks to ease lending to small manufacturers.
His ministry is ratcheting up pressure on wayward coalition allies of the ruling Congress party to agree on a long-overdue increase in heavily subsidised fuel prices.
Ministry officials warned for the first time last week that if the hikes did not take place soon, spending cuts might be necessary to keep the budget deficit under control. The cabinet may consider making a move on fuel prices this week.
Chidambaram's appointment may have bought the government a reprieve from international credit rating agencies, which have threatened to downgrade India to junk status over New Delhi's policy paralysis, ministry officials said.
But he does not have much time. Investors, weary of empty rhetoric and broken promises, are impatient for action now.
Chidambaram has made clear he understands the importance of winning back investors' confidence. That stands in stark contrast with his predecessor, Pranab Mukherjee, now India's president, who scared off foreign investors with confusing tax reform proposals and failed to drive through any major reforms during his near four-year term.
Tags: P Chidambaram, finance minister, Prime Minister, Manmohan Singh, Incredible India, Bank of Baroda, Reserve Bank of India, RBI
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