When word filtered through Washington last week that Pranab Mukherjee has been chosen as the “Finance Minister of the Year for Asia 2010”, the reaction in the lobbies of the annual meeting of the World Bank and the International Monetary Fund was curious. At a gathering which included finance ministry officials from Morocco and Estonia, everyone was going round congratulating anyone who looked Indian, including this columnist, on the assumption that all those who looked Indian at that venue must be aides to Mukherjee or members of the Indian delegation to the World Bank-IMF meetings.

The reaction was curious because Morocco’s finance minister, Salaheddine Mezouar, and Estonia’s finance minister, Jurgen Ligi, had also been selected as “Finance Ministers of the Year” respectively for emerging Europe and for the Middle East. However, no one seemed to take any notice of these choices, and aides to Ligi and Mezouar were understandably peeved that no one wanted to congratulate them or shake their hands. The only other award that appeared to generate some excitement was the one to a Muslim woman — Malaysia’s Zeti Akhtar Aziz, who was chosen “Central Bank Governor of the Year for Asia 2010.”

Journalists often cannot resist a mischievous twist to such proceedings; so this columnist nonchalantly told some of those who offered congratulations over the honour bestowed on Mukherjee that he had already been recognized as one of the five best finance ministers in the world the last time he held the same job in the Indian government. That was 26 years ago, when Estonia and several other countries represented in this gathering did not exist as independent states and many of their delegates were too young to know why Mukherjee got this award more than a quarter of a century ago. Or that while India is the flavour now at global gatherings, it was, for instance, not an Estonia or an Ivory Coast even in the 1980s.

Quickly, some Indian officials filled the information deficit by telling those who did not know that in 1984, the honour went to Mukherjee because, during his first innings as finance minister, India had turned down the last tranche of an IMF loan after the country put its finances in order under his stewardship.

India’s decision to approach the IMF in 1981 was an economic decision, forced upon the government by the mismanagement of the economy by Morarji Desai’s government and by a global oil crisis flowing from the Iran-Iraq war. For Indira Gandhi, it was a humiliating choice because IMF conditionalities for the loan ran counter to everything she preached and practised. R. Venkataraman, who later became president, was finance minister when India approached the IMF for a loan.

But in January 1982, Indira Gandhi shifted Mukherjee from his dual charge of commerce and steel and mines ministries and brought him in as finance minister. Mukherjee recognized that Congress politics at that time demanded that India should end its dependence on the IMF at the first opportunity, but he was equally aware that this would not be possible unless the country raised public-sector efficiency, initiated fiscal reforms, howsoever limited, and began a process of ending the licence raj. Instant history may not acknowledge this, but if there is a cut-off point to which India’s economic reforms can be traced, it was Mukherjee’s two-year tenure as finance minister. His recognition in 1984 as one of the five best finance ministers in the world was in acknowledgement of this landmark effort.

Mukherjee wove politics and economics into a grand mural to Indira Gandhi’s liking then, bailing her out from the humiliation of having to follow the IMF’s diktats —which were to come into force only in November 1984 — and delivering a vastly improved economy. Last week, in Washington, the finance minister once again used politics to protect India’s economic interests at the World Bank-IMF annual meetings.

This year’s Bank-Fund meetings had more significance for India than any such meetings in recent years. Until last week, for instance, India had only the remainder of this year to convince deputies of the International Development Association that the country should continue to receive money from the World Bank’s window, which provides interest-free credits and grants to the world’s poorest countries. In the 1970s and 1980s, critical years in their economic development, India and China received some 63 per cent of IDA’s total assistance worldwide.

Their share came down in later years; yet, in the last decade beginning in 2000, India received $12.6 billion, an average of $1.2 billion a year. This is not a small amount to be scoffed at by a country which has anything between 500 to 600 million poor people, especially since 83 per cent of IDA assistance has gone for rural development projects, education as well as health and nutrition. In the last year or two, there have been demands from donors — especially the United Kingdom, the IDA’s largest donor — that India should no longer be given soft loans because it is an emerging economy, destined to be one of the most powerful economies in the world.

By the time the Bank-Fund annual meetings were over, Mukherjee, in his role as second vice-chair of the “Group of Twenty Four”, a ginger group of developing countries on monetary and development finance, had got the group to commit that “developed countries need to meet their responsibility as the principal donors in order to ensure a successful IDA-16 replenishment.”

Subsequently, a ‘development committee’, which advises the boards of governors of the World Bank and IMF on issues related to economic development, issued a communiqué, which was silent on demands by the UK and some other developed countries that India, China and others should have to pay for their growth notwithstanding the massive development needs of millions of their poor people.

The finance minister has prepared the ground for India to continue to have an inflow of about $1.2 billion in easy money for financing development, but the country still has to make the case before the IDA, in a few months from now, that money from tax-payers around the world, which is replenishing the IDA, is being put to good use and not being squandered.

Mukherjee successfully disarmed anyone in Washington who complained to him that India was no more enthusiastic or proactive about its economic reforms. Once again, using political arguments to score economic points, the finance minister silenced those in Washington who had reservations about India, some three weeks before the visit of the president of the United States of America, by insisting that reform “legislation cannot be done only on the basis of intention. You require the number — majority on the floor of the House. The Congress party does not have a clear majority on the floor of the House to get (reform) legislation started. We do not have 272.”

Of all the finance ministers from all over the world who were in Washington last week, Mukherjee was the only one for whom the US secretary of state, Hillary Clinton, found time. The meeting was, once again, a reminder of how far India had come in its dealings with the US. Mukherjee can recall the time in the 1990s, when he was external affairs minister for the first time, and India’s dealings were primarily with none higher than the assistant secretary of state for South Asia.

Equally, it was not surprising that the two awards which got most attention were both from Asia — for India’s finance minister and Malaysia’s Central Bank governor — thereby underlining the current interest worldwide in the region. This year’s award was instituted by Emerging Markets, the daily newspaper of record for the Bank-Fund meetings through nominations from public and private sector economists, analysts, bankers, investors and other experts. Mukherjee’s award 26 years ago was given by Euromoney magazine through a similar process.