FM advisor Shome quits ahead of Budget

Finance minister P Chidambaram will have to rely on an all new budget team this time. Architect of key tax measures in the last three years, Parthasarathi Shome resigned from his post of advisor to the finance minister. The government has accepted his resignation and he will relinquish charge on January 11.

No official comment was available from Mr Shome who is travelling at present. It is understood that he has cited personal reasons for leaving. With research and academics being closest to his heart, he was keen to return to them and was in the running for the directorship of IIM-A, recently. However, speculation was rife in the corridors of power that it was differences with the bureaucracy that prompted Mr Shome to resign.

This is the fourth change in the budget-making team. P V Bhide took over as revenue secretary from K M Chandrasekhar, D Subbarao replaced Adarsh Kishore as finance secretary, and Arvind Virmani became chief economic advisor in place of Ashok Lahiri. Expenditure secretary Sanjiv Misra's tenure, however, has been extended by three months till March 31. Financial sector secretary Vinod Rai is also going, as CAG, but after the Budget.

Mr Shome played a key role in introduction of value-added tax, fringe benefit tax and banking cash transaction tax. He had joined as advisor to Mr Chidamabaram in October 2004 for three years. His tenure was recently extended till October 2009 but the contract has been terminated from January 11, according to an official note.

Mr Shome was the representative of Union finance ministry in the empowered committee of state finance ministers on value-added tax and brought his experience in introduction of VAT in Brazil. In fact, he is the first Indian to be awarded Brazil's highest civilian honour for a non-Brazilian — Commander of the Order of the Southern Cross. Mr Shome has worked with the International Monetary Fund and contributed to the tax polices in Latin America and the Asean.

He was the co-convener of a working group on Goods and Services Tax, which is proposed to be introduced from April 1, 2010. He was also in the committee working out the rates for GST.

Source : Economic Times - Gurgaon, Haryana, India, dated 29/12/2007