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 56-year-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.
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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 procedural roadblocks standing in the way of large infrastructure projects. New Delhi also reduced diesel subsidies that were exacerbating the country’s deficit and introduced direct cash transfers to the bank accounts of welfare recipients and other public beneficiaries — the better to reduce leakage and fraud. By raising taxes on the rich and reducing other subsidies, Chidambaram’s Feb. 28 budget also helped maintain India’s creditworthiness, which ratings agencies had threatened to downgrade. Many of these reforms had been in the works, but Chidambaram got them to the line. “There was a crisis,” he tells TIME. “Someone had to take responsibility to get a few things right.”
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The 67-year-old career MP and lawyer by training is one of the most recognizable faces in India today. Elsewhere, finance ministers don’t have to worry about paparazzi. In India, they do. Managing the government’s money has always been crucial in a country where so much power rests in the center and, perhaps more important, where so many still have so little. The post has had even more cachet since 1991, when Manmohan Singh, then the Finance Minister, delivered his landmark speech to Parliament, outlining his plan to liberalize the economy. Since then, finance ministers have had the power to change the course of the nation — for better and worse. Early last year, when Pranab Mukherjee, now India’s President, proposed a flurry of retroactive taxes, including levies on decades-old offshore transactions and software imports, foreign companies blasted the proposal.
Chidambaram has had a happier track record. During his first stint (1996 — 98), he presented what came to be called, for its robust reforms, including deep cuts in income and corporate taxes, the “dream budget.” During his second (2004 — 08), India’s economy grew faster than at any point in its history. His third tenure will be defined by whether or not he can get India back on that path. So far, he has managed to peel off a layer of gloom when nobody else could. “From his very first few utterances, [Chidambaram] made it clear he meant business,” says Rajya Vardhan Kanoria, an industrialist and former president of the Federation of Indian Chambers of Commerce and Industry. “We used to hear the same thing, but we never used to see the same action.”
Over the past few years, Chidambaram has gone where the action is. Within days of the attack by Pakistan-based terrorists on Mumbai on Nov. 26, 2008, he was moved to the Home, or Interior, Ministry. Then, as the economic mood darkened last year, he was moved back. Ashok Jha, an ex-official who worked with Chidambaram in the Commerce and Finance ministries, describes his former boss as “totally hands on” 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.”
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Knowing the Score
Chidambaram, or “p.c.,” as he’s commonly called, has a breadth of experience especially relevant to his job today. Besides the variety of his political work in New Delhi, as a lawyer he represented high-profile corporate clients. That exposure to both public and private sectors is an asset. “I am aware it is not easy to run a business in India,” he says. “I am aware of the difficulties that business faces, especially in a system of controls.” Chidambaram thinks quickly and exudes an air of competence and confidence. Associates say he is impeccably prepared for meetings and press conferences, part of a formidable work ethic all too rare among officials who have been in public service for decades.
Chidambaram’s business-first approach can be traced to his roots. Amid the palm trees and paddy fields of Sivaganga stand many large, ornate houses. Built by a close-knit community of businessmen known as 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 influential Chettiar family in Sivaganga in 1945, but from an early age he sought opportunity beyond the family business. He studied law in India, then got an M.B.A. at Harvard. His days in Cambridge, Mass., he tells TIME, taught him “how the economy works, how investment was the key to growth, and how many countries had succeeded in abolishing poverty.” When he returned to India to practice law, he experienced firsthand “the stultifying effect of controls, licenses, permits and government control over everything … I came to the conclusion that what India needed was an open economy, just as we have an open democracy.”
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Soon he got involved in Congress’s Tamil Nadu chapter and caught the attention of party royalty in New Delhi. During her years as Prime Minister, Indira Gandhi would regularly call on him to be her translator when she visited Tamil Nadu. “She showed him special favor,” says a longtime Chidambaram associate who declines to be named. Chidambaram’s closeness to the Gandhi family ensured his quick rise in the capital; he was named Deputy Commerce Minister in 1985, a year after he became an MP. But while connections may have helped him get into power, his supporters say it is his intellect and discipline that have kept him there. “There are many people who are bright, but they don’t work hard; and there are many people who work very hard but aren’t too bright,” says Jha. “He’s both.”
That reputation has not protected Chidambaram from the scandals in which Indian politics seem constantly mired. For instance, in 2011, when he 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 the allegations, and in August the Supreme Court cleared him of any wrongdoing.
Nor has Chidambaram been an unqualified success. When he was moved to the Home Ministry after the 2008 siege of Mumbai, his brief was to overhaul the security apparatus that had failed to anticipate the attacks. He created the National Investigation Agency (envisioned as India’s answer to the U.S.’s FBI), ordered the staffing up of the Intelligence Bureau and the Central Reserve Police Force, and sought to build a national database of criminals and militant extremists. But the effectiveness of his measures is debatable. Terrorism remains a scourge: in the latest atrocity, on Feb. 21, 16 people were killed in twin blasts in a crowded market in the southern city of Hyderabad. And while Chidambaram makes fast and 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 coalition pulled out, and global retailers — expected to jump in once clearance was given last fall — have shown caution given the uncertain political environment. “He may not be able to get everything that he wants done because of the political situation,” says Zia Mody, a senior partner at Mumbai law firm AZB & Partners, who has known Chidambaram for years. “But I think he will get a decent amount of the agenda flowing.”
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He Could Be a Contender
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 itself heading another unstable coalition.
If Congress does win and Sonia is pressured to appoint a manager of the economy as PM — as she was with Singh in 2004 — then Chidambaram, also a party stalwart, enters the picture. (Few expect Singh, who is now 80 and nearing the end of his second term, to again be PM.) Chidambaram says he does not want the nation’s top political job: “I have no such expectation and no such aspiration.” Perhaps trying to meet the aspirations of hundreds of millions of Indians is already a big enough task. With ever more people like 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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