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Subbaiah Sellam lifts the nightshirt he's sewing, showing off the gold thread embellishments along the collar. "It's for the bank manager," explains the 56year-old tailor in Nattarasankottai, a drowsy farming village in the southern Indian state of Tamil Nadu. Another customer for his spare, hole-in-the-wall shop is not the only benefit that the newest bank branch in town has brought Sellam. He has also taken out a loan to send his son to engineering school. "I've recommended the bank to a lot of people," he says.
Sellam owes his new dose of capital to India's Finance Minister, Palaniappan Chidambaram. As the local parliamentarian, Chidambaram energetically lobbied to open more state bank branches in his constituency of Sivaganga, which envelops Nattarasankottai. Because of his influence, the village now has four bank branches — a high number for a place where the most common financial transactions are farmers putting up gold jewelry as collateral to buy seeds. But little Nattarasankottai is just a small piece in Chidambaram's plan to make hundreds of millions of marginalized Indians part of the country's growth story, one bank account at a time. Once, it was nearly a given that India's shining new prosperity would trickle down to the likes of tailors and farmers. For most of the 20-odd years since reforms opened up its economy, the country was on an upward trajectory with annual GDP growth rates reaching 9%. But when Chidambaram took over the Finance Ministry in August — his third time in the job — GDP and investment had been sliding for eight consecutive quarters. While the tough global environment has hurt India's economy — Asia's third largest after China and Japan — its condition has been aggravated by purely local wounds: high inflation, high public debt, poor infrastructure and stubborn barriers to business. Growth eased to 4.5% in the last quarter of 2012, down from 5.5% earlier in the year. Those are figures that many hard-hit Western nations would yearn for, but not enough for India, which has to secure a future for nearly 600 million citizens — and counting — under the age of 25. The sheen of India Inc. has also been dulled by headlines about relentless corruption, conflicts like the one over Kashmir, domestic terrorism and violent crime (especially the notorious gang rape of a young woman who was attacked in a New Delhi bus on Dec. 16 and later died from her wounds).
Growth is not a panacea for all of India's ills, but Chidambaram believes further reforms will enable the country to get back its mojo. Last year, defying political opposition, the Congress Party — led coalition government opened up India to foreign multibrand retailers like Tesco and Walmart, permitted foreign airlines to own 49% of domestic carriers and created the Cabinet Committee on Investment to clear the Chidambaram's business-first approach can be traced to his roots. Amid the palm trees and paddy fields of procedural roadblocks standing in the way of large infrastructure projects. New also reduced diesel Sivaganga stand many large, ornate houses. Built by a close-knit community of Delhi businessmen known as subsidies that were exacerbating the country's deficit and introduced direct cash transfers to the bank Chettiars, the homes are a testament to the prosperity they reaped trading with Sri Lanka, Burma and several African nations. Chidambaram was born into a rich and family in Sivaganga accounts of welfare recipients and other public beneficiaries —influential the better Chettiar to reduce leakage and fraud.in By 1945, but from an early age he sought opportunity beyond the family business. He studied law in India, raising taxes on the rich and reducing other subsidies, Chidambaram's Feb. 28 budget also helped then got an M.B.A. at Harvard. His days in Cambridge, Mass., he tells TIME, taught him "how the economy maintain India's creditworthiness, which ratings agencies had threatened to downgrade. Many of these works, how investment was the key to growth, and how many countries had succeeded in abolishing reforms had been the works, but Chidambaram got he them to the line.firsthand "There was a crisis," he tells TIME. poverty." When he in returned to India to practice law, experienced "the stultifying effect of controls, licenses, permits control over everything ... I came what "Someone had toand government take responsibility to get a to the fewconclusion things that right." India needed was an open economy, just as we have an open democracy. The he 67-year-old career MP and lawyer byNadu training is one ofcaught the most facesroyalty in India Soon got involved in Congress's Tamil chapter and the recognizable attention of party in today. New Elsewhere, ministers don't haveIndira to worry about paparazzi. India, they Managing the Delhi. During finance her years as Prime Minister, Gandhi would regularly In call on him to do. be her translator when she visited Tamil Nadu. "She showed him special favor," says a longtime Chidambaram associate government's money has always been crucial in a country where so much power rests in the center and, who declines toimportant, be named. Chidambaram's closeness to the Gandhi family ensured his cachet quick rise in1991, the perhaps more where so many still have so little. The post has had even more since capital; he was named Deputy Commerce Minister in 1985, a year after he became an MP. But while when Manmohan Singh, then him the Finance delivered his landmark speech to Parliament, outlining connections may have helped get into Minister, power, his supporters say it is his intellect and discipline that his plan to liberalize the economy. Since then, finance ministers have had the power to change the course have kept him there. "There are many people who are bright, but they don't work hard; and there are many people work very but aren't too bright," says Jha.when "He's Pranab both." Mukherjee, now India's President, of thewho nation — for hard better and worse. Early last year, proposed a flurry of retroactive taxes, including levies on decades-old offshore transactions and software That reputation has not protected Chidambaram from the scandals in which Indian politics seem constantly imports, companies blasted proposal. mired. Forforeign instance, in 2011, when he the was Home Minister, the opposition accused him of being complicit in the so-called 2G scandal, in which the government sold telecom spectrum at throwaway prices. He denied Chidambaram has in had a happier track record. During his first stint — 98), he presented what came to the allegations, and August the Supreme Court cleared him of any (1996 wrongdoing. be called, for its robust reforms, including deep cuts in income and corporate taxes, the "dream budget." Nor has his Chidambaram been an unqualified success. When he was to the Home Ministry after the During second (2004 — 08), India's economy grew faster than atmoved any point in its history. His third tenure 2008 siege of Mumbai, his brief was to overhaul the security apparatus that had failed to anticipate the will be defined by whether or not he can get India back on that path. far, he has managed to peel off a attacks. He created the National Investigation Agency (envisioned asSo India's answer to the U.S.'s FBI), layer of gloom when nobody else could. "From his very first few utterances, [Chidambaram] made it clear ordered the staffing up of the Intelligence Bureau and the Central Reserve Police Force, and sought to build a national database criminals and militantan extremists. But the effectiveness of is he meant business," saysof Rajya Vardhan Kanoria, industrialist and former president ofhis themeasures Federation of debatable. Terrorism a scourge: in the latest atrocity, on Feb. 21,thing, 16 people were killed in to twin Indian Chambers of remains Commerce and Industry. "We used to hear the same but we never used see blasts in a crowded market in the southern city of Hyderabad. And while Chidambaram makes fast and the same action." hard decisions, that doesn't mean a fractious Parliament will go along with them. After he successfully moved for more foreign direct investment in India's insular retail sector, one member party of the ruling Over the past few years, Chidambaram gone where the action is. clearance Within days of given the attack coalition pulled out, and global retailers has — expected to jump in once was last by fallPakistan— have shown given the uncertain political environment. "He not beor able to get everything that he basedcaution terrorists on Mumbai on Nov. 26, 2008, he was moved tomay the Home, Interior, Ministry. Then, as the wants done because of the political situation," says Zia Mody, a senior partner at Mumbai law firm AZB & economic mood darkened last year, he was moved back. Ashok Jha, an ex-official who worked with Partners, who has known Chidambaram for years. "But I think he will get a decent amount of the agenda Chidambaram in the Commerce and Finance ministries, describes his former boss as "totally hands on" flowing." and one of the few politicians able to make things happen quickly in a vibrant, but sluggish, democracy. "He walks into a difficult situation and improves matters," says Jha. "He's a good troubleshooter." He Could Be a Contender
Knowing the Score Enough to one day become prime minister? National elections are not scheduled until next year, but jockeying has begun. Rahul Gandhi — Indira's grandson and the son of current Congress leader Sonia — was recently made party vice president and is expected by many to be its choice for PM in the polls. But his interest in the post is uncertain and his lack of political experience could be a liability if Congress finds Chidambaram, or "p.c.," as he's commonly called, has a breadth of experience especially relevant to his job itself heading another unstable coalition today. Besides the variety of his political work in New Delhi, as a lawyer he represented high-profile That exposure both public and private sectors is aneconomy asset. "I am aware it is not easy to If corporate Congress clients. does win and Sonia is to pressured to appoint a manager of the as PM — as she was with Singh in 2004 — then Chidambaram, also a party stalwart, enters the picture. (Few expect Singh, who run a business in India," he says. "I am aware of the difficulties that business faces, especially in a system is now 80 and nearing the end of his second term, to again be PM.) Chidambaram says he does not want of controls." Chidambaram thinks quickly and exudes an air of competence and confidence. Associates the nation's top political job: "I have no such expectation and no such aspiration." Perhaps trying to meet say he is impeccably prepared for meetings and is press conferences, part task. of a formidable work people ethic all too the aspirations of hundreds of millions of Indians already a big enough With ever more like rare among officials who have been in public service for decades. the village tailor, Sellam, sending their kids to school for the first time, a whole new generation of educated, ambitious citizens is emerging. They're going to expect much more from their finance ministers than a few bank branches.
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