Chidambaram back as Finance Minister, Shinde gets Home

Home Minister P Chidambaram will be the next Finance Minister of India; on Tuesday, his predecessor and now President of India Pranab Mukherjee signed a notification effecting the change, sources said. Mr. Chidambaram will take charge of the portfolio Wednesday morning. 

Sushil Kumar Shinde, who is the power minister, will get Mr Chidambaram's portfolio of the Home Ministry while Corporate Affairs minister Veerappa Moily will take additional charge of the Power Ministry.

“There are no bad days to take over a job,” said Moily, who takes over at a time when 19 states and over 600 million people were stranded without power after grids in north, east and northeast India collapsed on Tuesday. 

This is the third time Mr Chidambaram will assume the role of Finance Minister. He first held the position in 1996 in the United Front government and later became finance minister in the United Progressive Alliance (UPA) government in 2004, led by Manmohan Singh, who is credited with India's first major round of economic reforms in 1991.

Along with Reserve Bank Governor D Subbarao, his handling of the economy helped India avoid the worst of the global financial crisis that followed the late 2008 collapse of investment bank Lehman Brothers. 

The Congress also needs to decide and announce, before Parliament meets next week, who will replace Mr Mukherjee as Leader of the Lok Sabha. There has been a demand from some Congressmen that two-term MP Rahul Gandhi be elevated to that role. Congress president Sonia Gandhi is expected to take a decision soon; among those whose names have reportedly been considered is Mr Shinde.

Parliament sits next week for the monsoon session and the government had indicated that before the session began, that it would fill the important Finance Ministry. The Prime Minister has held interim charge for a little over a month now, but was clear that the job needed a full-time minister with the economy struggling with slow growth and high inflation.

Following the re-allocation, however, much noise can be expected from the opposition benches. The BJP-led opposition has targeted Mr Chidambaram, even boycotting him in Parliament, or what it alleges is his role in the 2G scam. That dates back to 2008, when Mr Chidambaram was finance minister.

In the face of such vociferous opposition, Mr Chidambaram's appointment as Finance Minister indicates that his party backs him to the hilt. It is also being seen as an indication of a shift in policy. The biggest criticism of the UPA 2 government, and the finance ministry under Mr Mukherjee, has been what is called its policy paralysis. Mr Chidambaram's appointment will be interpreted as a thumbs up to reforms, seen as critical by industry.

Mr Shinde has suddenly been the man in the hot seat over the last two days, with the Northern Grid collapsing yesterday, plunging 300 million people in darkness and then three grids – Northern, Eastern and North Eastern – collapsing today, leaving 19 states and 600 million people without power. As Home Minister, Mr Shinde is likely to confront crises more frequently. It is a much bigger appointment and will come to him despite the Adarsh scam cloud and an average performance as power minister. But Mr Shinde, apart from being a veteran Congressman, is also a prominent Dalit leader.

This exercise is being looked at more as a re-allocation of tasks and a bigger cabinet reshuffle is expected in a couple of months.