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Jayalalitha virtually annexes finance ministry

George Iype in New Delhi

All-India Anna Dravida Munnetra Kazhagam supremo J Jayalalitha has apparently received her first pound of flesh from Prime Minister Atal Bihari Vajpayee for extending support to the Bharatiya Janata Party government at the Centre.

The finance ministry has been bifurcated between Finance Minister Yashwant Sinha and his minister of state, R K Kumar of the AIADMK.

According to an official order issued by Sinha personally, Kumar, a close aide of Jayalalitha and her chartered accountant, has virtually been allocated independent charge of the key departments of revenue, banking, and insurance with the finance ministry.

Ministry officials admit that "this strange work allocation would very much dilute Sinha's powers as finance minister." But for the BJP, handing over the above-mentioned crucial departments to Kumar was part of "a political arrangement" to placate the party's important ally Jayalalitha. The AIADMK and its allies comprise the second largest block after the BJP on the Treasury benches.

Ministry officials believe that entrusting Kumar with the powerful ministerial departments without officially giving him independent charge is a deft move by the prime minister. "Giving the AIADMK nominee independent charge would have meant an order from the President's secretariat. It would have displeased many BJP leaders," said a source.

According to the ministry, Kumar is now in command over important departments like the Enforcement Directorate, the Directorate of Revenue Intelligence, the central economic intelligence, banks, and insurance companies, including the Life Insurance Corporation and General Insurance Company.

Sinha's predecessors, Dr Manmohan Singh and P Chidambaram in the Congress and the United Front governments respectively, had held full authority over the departments of revenue, banking, and insurance though there were a number of ministers of state under them.

For instance, former prime minister P V Narasimha Rao had provided three ministers of state -- Rameshwar Thakur, Shantaram Potdukhe, and Dalbir Singh -- to assist Dr Singh. "Though the departments of expenditure, revenue, and insurance were allocated between them, no files moved without Dr Singh's approval," said a ministry source.

But under the new work allocation in the ministry, it will not be binding on the minister of state to seek his senior colleague's approval to clear files relating to revenue, intelligence, enforcement directorate, banks, and insurance companies.

The splitting of the ministry will also curtail Sinha's control as finance minister over a number of regulatory mechanisms that manage and play significant roles in the nation's economy.

The finance ministry was bifurcated only once before, by then prime minister Indira Gandhi in 1975 during the Emergency. Though C Subramaniam was the finance minister in her Cabinet, new departments of revenue and banking were created and put under the direct control of then minister of state Pranab Mukherjee.

Opponents had then criticised the move and rated it among "the grossest abuses of power and excesses of then Emergency."

Insiders said Jayalalitha, who had tried desperately to wrest the finance minister's portfolio for her nominee, has forced the virtual bifurcation of the ministry with to view to fighting the number of corruption cases registered against her. The Enforcement Directorate is at present investigation corruptions charges against her companion Sasikala Natrajan.

By virtue of his position, not only will Kumar be able to delay or stall probes against Jayalalitha, but also initiate investigations against Chidambaram and Tamil Maanila Congress president G K Moopanar. The AIADMK chief has alleged that the TMC duo are involved in the Indian Bank scandal.

Even though Kumar will deal with the departments of revenue, banking, and insurance independently, matters relating to the forthcoming Budget will, however, be directly handled by Sinha.

"Kumar will also have to seek clearance and approval from the finance minister on all major policy decisions like opening up the insurance sector for private sector, though the insurance department is with him," a ministry official said.

The government order states: "Items requiring the approval of the finance minister under the existing law and statute shall be put up to the finance minister through the minister of state."

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