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Wall Street banker sworn in as Tamil Nadu finance minister faces trial by fire in new job  

Palanivel Thiaga Rajan is an alumnus of MIT Sloan School of Management. He takes over as TN finance minister at a time when the state is reeling under high debt and huge fiscal deficit.

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Chennai: For nearly two decades, Palanivel Thiaga Rajan, or PTR as he is better known, has dabbled in the finance sector.   

An alumnus of the prestigious MIT Sloan School of Management, PTR has worked with global financial institutions such as Standard Chartered and Lehman Brothers. 

The 55-year-old, who hails from Madurai, is also no stranger to politics — his grandfather P.T. Rajan was the Justice Party chief minister of the Madras Presidency in the 1930s, and his father PTR Palanivel Rajan was a former Tamil Nadu Speaker and a DMK minister. 

Those two worlds collided last Friday, when newly-elected Tamil Nadu Chief Minister M.K Stalin appointed the former banker as the state’s Minister for Finance and Human Resource Management.  

The appointment has created a real buzz, thanks in no small part to PTR’s financial and political pedigree. 

But he is set for a trial by fire — the country’s second largest economy isn’t really in the best shape. And with the Covid-19 pandemic showing no signs of slowing down, the new Tamil Nadu finance minister has his work cut out.   

Experts, however, have told ThePrint that he could be just the man for the job

‘Right man for the job’

Tamil Nadu is second only to Maharashtra as the most industrialised state and has the second largest economy in the country.

But the state is reeling under high debt and a huge fiscal deficit. According to the interim budget, in 2021-22, the state is estimated to have an overall revenue deficit of Rs 41,417.30 crore and fiscal deficit of Rs 84,202.39 crore.

The state is also seeing a resource crunch with at least Rs 12,263 crore due (as of February this year) from the Centre as Goods and Sales Tax (GST) arrears. 

The pandemic has further done no favours. Tamil Nadu was estimated to witness a growth rate of 2.02 per cent in 2020-21, compared to 8.17 per cent reported in 2019-20, though the state is registering positive growth. Government estimates released in January, meanwhile, projected that India’s economy will contract by 7.7 per cent in 2020-21.

Political economist Praveen Chakravarty told ThePrint that given the circumstances, PTR was the man for the job. 

“We are going through a health crisis and as soon as it is over, there is an economic tsunami waiting for us,” Chakravarty said. “At a time like this, only a person like Thiaga Rajan, who is knowledgeable as well as open to getting ideas from various people, can manage such an economic situation. The state has been left powerless and resourceless by this Union government. Thiaga Rajan is a staunch federalist and it will be very important for him to try and mobilise resources that the state needs.” 

Chakravarty added that Thiaga Rajan’s presence will add heft to the GST council. 

“He brings in domain knowledge, which is important. But he also brings in the ability to solicit and bring ideas from various sources,” the economist added. “That’s what is more important because no one person will have answers for everything. He is very passionate about finance and economics. All of that will lead to him creatively raising resources. The GST council will be bolstered strongly by his presence and I look forward to the conversations between him and the Union finance minister.” 

Jothi Sivagnanam, Professor of Economics at the University of Madras. echoed the assessment.

“No one other than Mr Palanivel Thiaga Rajan can be the right choice for this portfolio,” Sivagnanam told ThePrint. “He has already spoken on the issues in the state finances and has a complete grip over current issues.”  

Sivagnanam, however, cautioned that Thiaga Rajan was looking at a grim situation. 

“Even before Covid, the state’s finances had deteriorated. The revenue deficit is huge now and public sector units and their financials are not healthy. The incoming government is inheriting an utter financial mess and this has to be fixed,” the economist said. “The new chief minister is also keen on implementing the promises in his election manifesto. Nobody foresaw the second Covid wave and so implementing these promises would also incur a fiscal deficit.” 

Also read: Paddy to chilli — What Tamil Nadu farmers’ ‘Red Revolution’ can teach Punjab

A reluctant politician

For most of his life so far, Thiaga Rajan was a reluctant politician. He spent much of his years in the US where he completed his postgraduate studies and worked.  

When his father and DMK veteran Palanivel Rajan passed away in 2006, incidentally while returning to Madurai after being sworn in as a minister in the then M. Karunanidhi cabinet, PTR was offered the party ticket for his father’s then seat — Madurai Central. He turned it down, citing personal reasons. 

He held out for another 10 years, before finally taking the political plunge in the 2016 assembly elections when he won for the first time from the Madurai Central constituency. He comfortably retained the seat in the 2021 elections, winning by 34,176 votes. 

The NIT Trichy graduate

Thiaga Rajan did his schooling at the Lawrence School in Lovedale, near Ooty, and has a degree in Chemical Engineering from the Regional Engineering College (REC) in Tiruchirappalli, now renamed as the National Institute of Technology. 

Talking to ThePrint, one of his batchmates from NIT Tiruchirappalli remembered Thiaga Rajan as being “extremely smart, intelligent and efficient”. 

“He was an authority on whatever topic he chose. He wasn’t studious but very efficient in his studies,” the batchmate said. “Back then, he used to have an Ind Suzuki bike. Today, he is very accessible in the alumni community and participates in all the editions of our global alumni meet.” 

Thiaga Rajan then did his postgraduation in Operations Research at the University at Buffalo in the United States. He also obtained a doctorate from the same institution. 

Briefly a lecturer in the university, he launched an international consulting practice for clients of the manufacturing sector in the US and Canada. 

He then enrolled for the MBA programme at the MIT Sloan School of Management in Cambridge where he was taught by, among others, the Nobel Laureate Franco Modigliani. 

Also read: Why DMK is angry with portrayal of 1995 Kodiyankulam violence in the Tamil movie Karnan

The Wall Street banker

After his management studies, he joined the infamous Lehman Brothers and moved up the ladder quickly to head their Offshore Capital Markets. When Lehman Brothers went into crisis and filed for bankruptcy in 2008, he reportedly gave a fiery speech to nearly 500 employees. 

He then joined the multinational banking and finance services company Standard Chartered as its managing director overseeing the sales of several fixed-income products globally. He was placed in Singapore. 

Thiaga Rajan moved back to India after his father’s demise. He is also the founding secretary of the DMK’s IT wing. 

(Edited by Arun Prashanth)

Also read: Stalin has won, but Udhayanidhi is the real ‘rising son’ of DMK


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