FACING an acute dearth of talent, the United Progressive Alliance (UPA) government has been depending on key ministers — the political equivalent of fire-fighters — to rescue it from a series of crises that have bedeviled it, especially in its second term beginning 2009.

Unfortunately for Manmohan Singh, the prime minister, the number of fire-fighters is also declining steadily. Pranab Mukherjee, now the president of India, was a man for all seasons for the UPA, the government’s chief trouble-shooter, who was over-burdened with responsibilities, which perhaps reflected in over-zealous bureaucrats making a mess at the finance ministry that he headed. Now that he is safely ensconced in the presidential palace in Delhi, the UPA government is left with just a handful of fire-fighters.

P. Chidambaram, the new finance minister, is one of them. After the 2008 terror attacks on Mumbai, Chidambaram had been brought into the home ministry to replace the nattily-dressed, but largely ineffective Shivraj Patil. Now with the Indian economy facing its biggest crisis in nearly a decade, Chidambaram has been moved to finance, where he is expected to rescue it from sinking into a recession, at least before the 2014 general elections.

But Chidambaram’s return to the finance ministry – from where he was moved to home in 2008 – has coincided with a flood of negative news that could easily have discouraged less sterner individuals. The Indian economy was buffeted by a series of depressing reports last week that should have sent the stock markets crashing.

The markets, however, have responded cautiously to the negative reports, hoping that Chidambaram – seen as the only politician in the UPA who can effectively tackle the economic malaise – would be able to set things right.

Chidambaram, a lawyer by profession, is highly qualified – he has an MBA from Harvard University, besides a master’s in law from a reputed Chennai college – but equally controversial. The BJP-led opposition had targeted him in previous parliamentary sessions and prevented him from making announcements or speeches in the house. He is also accused of being involved in the 2G telecom scam, though the courts have thrown out several of the cases brought against him by other politicians.

The technocrat-politician from the southern Indian state of Tamil Nadu – who is always attired in his traditional ‘veshti’ – also does not get along well with many of the earthy politicians from the political heartland of India, including from his own Congress party. A stickler for rules, he is also quite unpopular with bureaucrats and civil servants in Delhi, who like their ministers to be malleable.

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DAYS after taking over the reins at the finance ministry, Chidambaram last week had to deal with a slew of bad news. India’s industrial output fell for the third time in four months in June, figures released last week revealed.

Industrial production shrunk by 1.8 per cent from a year earlier in June on the back of a 3.2 per cent decline in manufacturing output. Manufacturing, which accounts for 76 per cent of the index of industrial production, has been hurt by slackening demand both in urban and rural areas and high interest rates. Exports too have decelerated sharply.

Industrial production for the April-June quarter – the first quarter of the fiscal – declined by 0.1 per cent. The biggest slump was in capital goods, which dropped by a hefty 27.9 per cent in June. Over the past 10 months, capital goods has gained just once.

Describing the latest numbers as disappointing, Chidambaram urged the need to remove supply bottlenecks and to raise production. “We intend to find practical solutions to the problems that impede higher production or output in the coal, mining, petroleum, power, road transport, railway and port sectors,” he said, reacting to the latest data.

Other economic data have been equally depressing. GDP growth slowed to a nine-year low of 5.3 per cent in the quarter ended March. GDP figures relating to the June quarter are due to be released later this month, but analysts do not expect any improvement.

Ratings agencies and analysts have been slashing economic growth for the current fiscal, even as the government itself – and many of its agencies – have had to go in for downward revisions.

Some of the harshest words came from international ratings agency Moody’s, which last week cut the growth forecast for the current fiscal to 5.5 per cent. “The slowdown has been sharper and more broad-based than anticipated and is now deeply entrenched across all sectors of the economy,” said the agency. It also cut India’s growth forecast for fiscal 2013 to six per cent from 6.2 per cent.

“There has been little policy response from either the Reserve Bank of India or the government and with the global uncertainty dragging on, we see nothing on the horizon to lift the economy from its funk,” said Glenn Levine, senior economist at Moody’s Analytics, in his report, ‘India Outlook: Below Potential.”

Prime minister Singh – dubbed an ‘underachiever’ in a recent Time magazine cover story – has been facing a barrage of negative news reports in the international media in recent weeks. Moody’s added to the growing flow of negative reports. “With two years left in office, Singh must turn things around quickly or risk becoming a lame duck for the remainder of his term, leaving behind a legacy of missed opportunity,” said Levine.

Referring to Chidambaram, he pointed out that the new finance minister was making all the right noises, but he needs to take bold measures to revive and restore the health of the economy. “While we applaud the intent of the new finance minister, it all has the feel of being a quick fix, last-ditch effort to avert the economy from its downward spiral. But an economy is a complex combination of millions of different units—households, firms, government entities and so forth—that cannot be easily manipulated using tricks or quick fixes, at least not over a prolonged period,” Levine noted.

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OTHER commentators have also been warning the government about the rapidly declining figures. “The stars just don’t seem to be aligning for India, with almost all the growth drivers being hit,” said Rohini Malkani, an economist with Citigroup, who has reduced the growth forecast for the current fiscal to 5.4 per cent.

According to her, if drought conditions worsen, headline growth could come in lower at 4.9 per cent. “We reiterate our view that while a change in guard in the finance ministry is positive, actions may be less than words given the continuation of the dual leadership model and all eyes on the next polls,” wrote Malkani.

Goldman Sachs has also reduced the growth prospects for the current fiscal to 5.7 per cent from 6.6 per cent. Bank of America Merrill Lynch said in a report: “The unfolding events should support our call that a drought - at high lending rates - will water down FY13 growth to 5.8 per cent.”

Others including Morgan Stanley and CLSA, a brokerage, have lowered their forecast for the current fiscal to below six per cent.

Crisil, the Indian unit of Standard & Poor’s has lowered the growth rate to 5.5 per cent. The government is now anxiously waiting for S&P’s next move: will it carry out its threat of downgrading the country to junk grade in its report?

If that happens, capital flows into the country could dip dramatically and the cost of borrowing funds overseas would rise steeply for Indian corporates.

Chidambaram, who has initiated a series of measures to restore confidence, admits that the economy is challenged by a number of factors. “But it is also true that with sound policies, good governance and effective implementation, we would be able to overcome these challenges,” he adds.

However, the very nature of the UPA government – a coalition comprising unreliable partners – would ensure that none of the more effective measures needed to restore confidence would be allowed to be implemented by its allies.

The Trinamool Congress, a key supporter of the government, got its own nominee as railway minister sacked – without even seeking the nod from prime minister Singh – after he dared to introduce minimal reforms earlier this year. The Trinamool Congress, headed by mercurial West Bengal chief minister Mamata Bannerjee, has been stonewalling every move to liberalise the economy.