Subir Roy: FM's one man think tank

BACKSTAGE

The rooms of the high and the might in the Union ministry of finance are along an L-shaped corridor. The corner office is of the finance minister, along one arm of the L reside the various secretaries, and along the other is the office of Parthasarathi Shome. He holds the rather plain designation of adviser to the finance minister, but is playing a powerful role in defining the contours of the Budget.

Every year in this pre-Budget season, the corridors of the finance ministry become a thoroughfare for all kinds of industry associations and interest groups seeking to submit their pleas or, in the official jargon, memoranda seeking concessions in the Budget. Along with their traditional call on the revenue secretary they also call on Shome.

Shome heads two bodies (for direct and indirect taxes) that prepare the theoretical underpinning of the Budget from which emerges the specific proposals. This setup conducts the pre-Budget discussions with various groups like economists which is so much a part of the Budget-making ritual.

Shome has several credentials for performing this role. During his two-decade long stint with the IMF he has got to closely know the public finances of as many 40 countries and the way they have tackled their fiscal challenges. His direct engagement with the Indian fiscal situation is most solidly contained between the hard covers of the reports of two advisory groups, which he headed, on the tax policy for the 9th and 10th plan. He has also been associated with two powerful think tanks in Delhi, NIPFP (he headed it) and ICRIER, which carry a lot of weight in matters economic.

But Shome's personal credentials are even better. He is a student of Prime Minister Manmohan Singh, is known to be close to Planning Commission Deputy Chairman Montek Singh Ahluwalia and, of course, has the full confidence of Finance Minister P Chidambaram. The finance minister's inability to suffer fools, even at the higher echelons of the bureaucracy, is well known. That he interacts with Shome so intensively, tells its own tale. Most of the Budget files go through him to the finance minister.

Those who are familiar with Shome's work say that his solid academic grounding apart (the National Tax Association of America cited him in 1975 as an "outstanding student of taxation and public finance" for his PhD thesis), he has a very sound and practical knowledge of the Indian tax system and the issues currently confronting it. Says a tax expert familiar with the system, "Shome is not into small repairs, he is looking at fundamental reforms." And with the economy doing so well, this is the time to put through radical changes.