Jaitley returns to North Block

Senior Bharatiya Janata Party (BJP) leader Arun Jaitley resumed charge of the finance and corporate affairs ministries on Thursday after a break of nearly three months following kidney transplant surgery.

Jaitley returns amidst rising macro concerns about the falling rupee, oil price volatility and GDP growth. In this three months while he was away, the rupee has lost 3.5% compared to the U.S. dollar. It plunged to a historic low of Rs 70 to a dollar in August. There were signs of improvement when the rupee closed at Rs 69.81 a dollar on Wednesday. But, it opened weaker on Thursday and kept losing strength. At the time of writing, the rupee has touched a fresh all-time low of Rs 70.10 a dollar.

Compounding the problems for Jaitley is the steady rise in crude oil prices. Indian crude basket, the price at which domestic refiners source crude oil, stood at $73.63 for the fortnight ended August 16. From November 4, this number could go even higher as the US sanctions on Iran take effect. India, which never stopped buying crude oil from Iran, has been increasing imports from the country ever since the sanctions were lifted in 2016 following a nuclear deal signed by former US President Barack Obama. Estimates from the government and brokerage firms suggest that as much as 787,000 barrels of crude oil were imported from Iran in July 2018. The preference for crude oil from Iran stems from the discounts and benefits like virtually free shipping, extended credit period of 60 days that the West Asian country offers to India.

The effect is visible in India's crude import bill. From April till July, the country paid Rs 2,64,030 crore ($39.07 billion) for crude oil imports. In rupee terms, the import bill is 31.5% higher this year; in dollar terms, the increase is 58.8%.

Jaitley’s biggest challenge, perhaps, will be reinforcing the India growth story in the minds of the Indian electorate, as the country prepares for the 2019 Lok Sabha elections.

A draft report on the gross domestic product (GDP) back series data showed that the Congress-led United Progressive Alliance governments (2004-2009 and 2009-2014) fared much better in terms of economic growth. The report, which has since been taken down, calculated India’s GDP with a base year of 2011-12 and showed that former Prime Minister Manmohan Singh’s government had managed to grow the Indian economy more than 10% at least twice during their 10-year tenure. In contrast, the average growth during Prime Minister Narendra Modi’s four-year tenure has been 7.3%.

Jaitley was recuperating from a kidney transplant surgery, which took place on May 14 and since then Piyush Goyal, Minister for Railways and Minister for Coal, was temporarily in charge of Jaitley’s portfolio.

Jaitley return was made official after the President Ram Nath Kovind, as advised by the Prime Minister Narendra Modi, reassigned the Minister of Finance and Minister of Corporate Affairs portfolios to Jaitley early in the morning.

A visibly fitter looking Jaitley, 65, returned to Rashtrapati Bhavan’s North Block in New Delhi, the seat of the Ministry of Finance at around 11 am. He got into action soon as he chaired a meeting with all the secretaries in the finance ministry.

During his hiatus from North Block, Jaitley remained active on social media. In a Facebook post on August 19, Jaitley argued that the UPA government in 2004 benefitted from the strong global economy and the health of the India economy left behind by former Prime Minister Atal Bihari Vajpayee. “The NDA government, led by Shri Atal Bihari Vajpayee, went out of office in 2004, leaving behind an 8%-plus growth rate. Additionally, in 2004, the government had the benefit of a continuous incremental reform from 1991 to 2004. The global tailwinds strongly supported growth,” Jaitley wrote.