New Delhi: In a much-anticipated but limited reshuffle in the Union Cabinet, P Chidambaram was made the Finance Minister and his portfolio of Home Ministry was given to Sushilkumar Shinde. Chidambaram's third stint as Finance Minister will see him taking on some huge challenges.
On November 30, 2008, when he was appointed the Union Home Minister, the Indian economy was faced with an unprecedented situation of a global financial meltdown which threatened to shatter the growth story and ultimately proved wrong the grand theory of decoupling.
As he prepares to come back to north block, this darling of India Inc has a number of stiff challenges to overcome.
First and foremost, to tackle the lack of fiscal credibility that the budget numbers for the current fiscal have been exposed to. This year too began with tall promises by the Finance Ministry, but unrelenting crude prices, the eurozone crisis, the devaluation of the rupee and the general lack of directional reforms has fed the impression that India has lost the plot.
It is this task of containing expenditure, raising taxes and moving ahead with financial sector reforms that the market will look forward to from Chidambaram. And it is here that he will be assisted by a new Economic Affairs Secretary - Arvind Mayaram - who is also taking over on August 1. This should be then followed by a new chief economic adviser in a few weeks to replace Kaushik Basu, whose tenure ends on Wednesday.
This apart, Chidambaram could well take a cue from Prime Minister Manmohan Singh, who in the recent past has relied heavily on tax guru Parthasarathi Shome to try and unravel the taxation mess created by Budget 2012-13.
Sources suggest that Shome's external role as the head of a review panel looking into virtually all major tax issues of the budget could hark back to his previous role as the adviser to Chidambaram in his previous stint at North Block.
There are several other major initiatives that the new Finance minister will have to sign off on soon. These include the infrastructure debt fund norms, the details of the Rajiv Gandhi equity investors scheme and the proposal to provide a bailout to state owned power distribution companies. An ongoing plan to revitalise the mutual fund sector and lending weight to foreign direct investment proposals in the civil aviation and multi-brand retail sector are also crucial.
Within the next 45 days or so, Chidambaram will also have to attend the annual meeting of the international monetary fund, as well as take a call on how best to utilise the legacy structure of the financial stability development council. Repairing relations with mint street and other regulators, clearing the pending appointment of a new chief of the UTI, mutual fund, senior executives of public sector banks will be part of the huge list of files in his inbox.
As those who know him say, the Finance Minister and his new team will hit the ground running with a whip and a whistle in hand.