Finance Minister and Central Banker of the Year: The regional winners
Taking over as finance minister from Manmohan Singh, the architect of India's economic liberalization who served in the job for five years, was no straightforward task. But Palianappan Chidambaram was well suited to the role. As commerce minister in the previous Congress government of Narasimha Rao, this Harvard-trained lawyer from the southern state of Tamil Nadu had been closely involved with the process of liberalization.
In his first budget in July 1996, Chidambaram unequivocally reaffirmed his commitment to economic reform, earning the approval of the markets for his pragmatic and transparent approach. He set up a commission to work out a coherent policy on privatization; established a specialized infrastructure development corporation; announced the partial privatization of three state-owned banks; continued the tax reforms initiated by his predecessor and started up India's first depository.
When a severe liquidity crunch threatened to choke growth last year, Chidambaram persuaded the banks to drop interest rates, urged them to lend more and got the Reserve Bank to cut the cash-reserve ratio. Soon afterwards, in January, he opened up the government gilts market to foreigners, a move vital to the development of India's capital markets.