AGE: 58 EDUCATION: BSc from Presidency College, Chennai; a degree in law from Madras University; MBA from Harvard BACKGROUND: Supreme Court Lawyer Minister of State, Commerce & Personnel (1986-1989); Minister of State for Home (1986-1989); Minister of State, Commerce (1991-1992 and 1995-1996); Finance Minister with additional charge of Law, Justice and Company Affairs, (1996-98) CEO RATING: 9.3* * Out of a maximum of 10. Based on a poll of 83 CEOs conducted by TNS India

FOR IMMEDIATE ACTION

» Implementation of the Value Added Tax regime » Reducing the revenue deficit to zero by 2009 » Raising the tax to GDP ratio that is now an abysmal 9.6% » Implemenation of the Kelkar Committe's report regarding direct and indirect taxes » Rationalisation of tax structure to enhance compliance

REFORMIST CREDENTIALS

» Showed reformist zeal as Finance Minister (1996 -98) in United Front Government and Commerce Minister in Congress Government (1991-96) » Top-notch Supreme Court lawyer who has represented multinational companies, including Enron » Has articulated strong support for the World Trade Organisation in the past

70% CEOs that think Manmohan Singh will make an effective Prime Minister of the UPA government

Minutes, hours, a day at the most is all it takes to become a legend. Seven years later, people in India still remember the summer day in 1997 when P. Chidambaram rose from being a good, even great Finance Minister, into a legendary one. It took him 90 minutes to do so, 90 minutes in which he demolished the tax framework and rebuilt it, introduced what has been, to date, the most effective mechanism to take the parallel economy mainstream, abolished dividend tax, allowed Foreign Institutional Investors and Non Resident Indians to invest up to 30 per cent of the equity of Indian companies, and opened up health insurance to foreign companies. Industry cheered, the stock markets were on fire, and a legend was born. Manmohan Singh may be widely regarded as the father of economic reform but it is to Chidambaram, an erudite and punctilious lawyer from Chennai that the credit for presenting the best budget ever in India's history belongs. Every right-minded Indian wanted him to be Finance Minister in this government. No one expected Congress to give an all-important portfolio to a coalition partner about whom several Congressmen and some key allies nurtured serious reservations. So, when Congress President Sonia Gandhi and Prime Minister Manmohan Singh went ahead and named him Finance Minister, it sent the right kind of signal about the United Progressive Alliance's commitment to economic reform and growth.

If this writer is holding back the hosannas some, it is because 2004 is not 1997. The economy is, arguably, in better shape than it has been anytime in the past decade. However, the cascading benefits of economic reforms have reached the urban rich and the middle-class, not the rural poor. That has resulted in some not inconsiderable resentment towards reform and reformists. The easy way to address this is to resort to subsidies, sops, and increased government spending on initiatives that aspire for welfare, as opposed to growth. The tough (and right) way to do so is to reform with a vengeance and ensure that the benefits trickle down faster.

"The country still has a long way to go to compete with the rest of the world in terms of infrastructure. Airports, roads, water and electricity supply need to be improved significantly" NANDAN NILEKANI, CEO, Infosys Technologies	"Chidambaram had an excellent track record as finance minister of the country during 1996-98 and as a commerce minister earlier. We look forward to a pro-growth package" ONKAR S. KANWAR, Chairman and MD, Apollo Tyres	"Directionally, the FM should continue lowering indirect tax, widening of tax net and encourage investments by retaining tax sops on infrastructure development" S. A. NARAYAN, Managing Director, Kotak Securities

Now, as in 1997, Chidambaram will have to live with the communist parties. In 1997, they were part of the government. Now, they are stronger than they have ever been in Indian history, but are not part of the government, having chosen instead to support it from without. It is unlikely that Singh and Gandhi will countenance anything that could offend them. These constraints will cramp Chidambaram's style some, although the man himself has said that the Common Minimum Programme of the UPA (which the communist parties have vetted) gives him enough scope for reform. Industry and assorted pundits are willing to give him the benefit of the doubt. They are right to do so: if anyone can manage to script another dream budget (a term universally used to refer to Chidambaram's 1997 budget), Chidambaram can. "Chidambaram is known for taking bold initiatives and clearly has the knack of thinking out of the box," says Mukesh Butani, National Tax Director, Ernst & Young. "The fact that he has chosen to look at the recommendations of the Kelkar Committee is suggestive of his intentions to reform direct and indirect tax laws; we may be greeted with another dream budget."

The obvious counter-argument to that is the sheer scale of government spending the UPA's CMP suggests (see The CMP in MBA-speak... on page 46). As yet, no one knows where this money is going to come from although Chidambaram himself doesn't seem worried. "The ministry will find the resources that are required," has been his line. Sunil Sinha, a consultant with National Council of Applied Economic Research (NCAER), believes that the minister can raise part of the funds required by "increasing the ambit of services under the tax net, doing away with all exemptions as suggested by the Kelkar Committee, and ensuring the national implementation of Value Added Tax". Chidambaram's cause will be helped by a booming industry. In 2003-04, the government expected to collect Rs 51,499 crore as corporate tax; this has jumped to Rs 62,986 in the revised estimate. Indeed, adopting the Kelkar Committee's report may help Chidambaram garner more funds without increasing taxes, something that Subir Gokarn, Chief Economist, crisil, believes will kill the "great investment boom expected this year."

Can Chidambaram do all this and still please the communists? That's something we will know on July 2.