Front-runners for FM's post
As ex-Finance Ministers, both Chidambaram and Pranab have credentials for a post that will need them to pick up the reins of one of the fastest-growing economies.
Two leading reformist politicians Pranab Mukherjee and P Chidambaram are the top candidates for the Finance Minister's job after the main contender, Manmohan Singh, was elected by Congress as the next Prime Minister of India.
As former Finance Ministers, both Pranab Mukherjee and P Chidambaram have the credentials for a post that will require them to pick up the reins of one of the world's fastest-growing economies after its worst financial market turmoil in decades.
Harvard-educated lawyer-turned-politician Chidambaram, 59, and Mukherjee, 67, a commerce graduate from Kolkata, both excelled when they held the Finance and Trade portfolios previously, analysts said.
But some analysts say Chidambaram has an edge as he carried forward measures introduced by Manmohan Singh, the architect of economic reforms in India, by removing controls and restrictions in various sectors of Asia's third-largest economy.
Seen as a favourite of pro-reformers in industry, Chidambaram unveiled what is still regarded as a "dream budget" in 1996, when he lowered import tariffs and slashed taxes to boost tax compliance.
"From the market's point of view, Chidambaram would be a better choice. He is the one who is identified with the reform process and he was the one who brought down tax rates," said analyst at Credit Suisse Financial Services V Anantha Nageswaran.
"The country needs fiscal consolidation very urgently. We need a Finance Minister who believes in this and from that point of view Chidambaram is best suited for the job."
But it's still a neck-and-neck race between Chidambaram and Mukherjee, who signed the World Trade Organisation treaty on India's behalf when he was trade minister in 1994.
An author, journalist and teacher, Mukherjee has been on the board of governors of the International Monetary Fund, World Bank and Asian Development Bank and was rated one of the best Finance Ministers in the world by Euromoney magazine in 1984.
Another name being mentioned is that of former Reserve Bank of India governor Bimal Jalan.
An economist by profession, Jalan, 63, has worked as executive director representing India on the board of the IMF and World Bank. He took over the reins of the Reserve Bank of India (RBI) in November 1997 at the height of the Asian financial crisis.
These are credentials some analysts say would send a strong message to investors about India's commitment to pushing forward with reforms.
Jalan's tenure until August last year saw foreign exchange reserves soar despite economic sanctions imposed by the United States after India conducted nuclear tests in 1998, and lingering risks of a war with Pakistan.
The economy is estimated to have grown more than eight per cent in the fiscal year through March 2004 as the best monsoon rains in a decade stoked a consumer spending boom.
But the new Finance Minister will have his work cut out, analysts said. He will have to tackle an unwieldy fiscal deficit, improving India's infrastructure and reforming the tax system.
Analysts say the deficit, which has hit five to six per cent of Gross Domestic Product (GDP) in each of the past five years, is holding India back economically and restricting the funds available to fight poverty.
The Government has forecast the deficit should fall to 4.8 per cent of GDP in the fiscal year to March 2004 and 4.4 per cent next year.
But taking into account borrowing by state governments, the deficit is closer to 10 per cent of GDP, leaving little money for health, education or infrastructure improvements.