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Last Updated: Monday, 24 May, 2004, 00:53 GMT 01:53 UK
Profile: P Chidambaram
By Ethirajan Anbarasan
BBC Tamil Service

Palaniappan Chidambaram arrives for work
A business champion, but critics say he lacks a popular base
The appointment of Palaniappan Chidambaram as India's new finance minister will no doubt be encouraging news for business, boosting investors' confidence both in India and abroad.

The suave, articulate politician from the southern Indian state of Tamil Nadu is well known for his pro-market reforms and for his bold steps to abolish red tape during his earlier tenure as finance minister between 1996 and 1998.

The appointment of Mr Chidambaram will now enable Indian Prime Minister Manmohan Singh to concentrate on other governing issues and, more importantly, keeping the coalition partners together.

Until a few months ago, very few would have expected the 58-year-old Harvard-educated lawyer to become finance minister for a second time.


Beginning as a congressman, Mr Chidambaram first got elected to parliament from the Sivaganga constituency in Tamil Nadu in 1984 and became a junior interior minister under then-Prime Minister Rajiv Gandhi.

Later, he held the Commerce portfolio in the Congress party government of PV Narasimha Rao.

Mr Chidambaram [believes] countries which are open to competitive societies have succeeded in removing poverty, while those which remain closed and controlled have not
His stardom came when he became finance minister in 1996 under the United Front government.

By then, Mr Chidambaram had left Congress due to differences with the leadership over forming an alliance with another regional party in Tamil Nadu, the All-India Anna Dravida Munnetra Kazhagam of the present Tamil Nadu Chief Minister J Jayalalitha.


Economists acclaim his "dream-budget" for 1996-97, in which he brought discipline in government spending and launched an ambitious tax reform programme to tackle an unwieldy fiscal deficit.

His daring scheme to halt tax evasion, or Voluntary Income Disclosure Scheme, invited accolades as well as criticisms.

A firm believer in free trade, Mr Chidambaram is of the opinion that countries which are open to competitive societies have succeeded in removing poverty, while those which remain closed and controlled have not.

A strong supporter of World Trade Organization, Mr Chidambaram strongly believes that a rule-based global trading system will benefit developing countries.

Popular base

Mr Chidambaram lost the elections in 1999, which he contested on behalf of the erstwhile Tamil Maanila Congress party.

Though his supporters would like to see him as the future chief minister of Tamil Nadu, his critics say he lacks the political base to win elections on his own.

Although the TMC merged with Congress in 2002, he has managed to maintain his unit until today.

A darling of the industrialists, it remains to be seen how Mr Chidambaram can continue with fiscal reforms without angering the communist parties, whose support is crucial for this government's survival.

Coming from an affluent trading community (the Chettiars) Mr Chidambaram is a leading lawyer and has acted as consultant to many multinational firms.

But his critics accuse him of being arrogant and say he is not known to have the ability to reach out to the party cadres.

Nevertheless, his ability to convince Congress leaders has landed him in a position to lead the Indian economy at a crucial stage.


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