Mohandas Karamchand Gandhi is the only Indian who has a statue erected in his honour in Washington, a town of splendid memorials. While the Mahatma is a constant spiritual presence in the US capital — there is also a Gandhi Memorial Center— fiscally, it is the footprints of another Gujarati and Gandhi that is everywhere in the city: of the retiring District of Columbia chief financial officer (CFO) Natwar Gandhi.
During Nat Gandhi’s 12-year tenure as the independent CFO, the city made an epic turnaround in its finances, balancing the budget year after year and securing more than a dozen upgrades from major ratings agencies for its general bonds.
Before he took over, Washington was among the most fiscally mismanaged cities in the US. With deficit hovering around $500 million and ratings agencies lowering its bonds to “junk” status, the federal government had snatched the city’s finances in the mid-1990s.
By 2005, under Gandhi’s stewardship, Washington recorded a fund balance of $1.5 billion — a turnaround of about $2 billion — outperforming even New York and Philadelphia.
Washington, home to the White House, Congress and various federal departments, may be synonymous with global power, but financially, its tax base is very limited.
Many who work in the District live in neighbouring states, meaning they don’t pay DC taxes despite using the city’s services. As Gandhi pointed out in a 2010 interview with this writer, 12 of the 15 largest employers in the city do not pay taxes. One thing the city has learned to do well under Gandhi is eschewing a habit that drove it to bankruptcy in the past: reckless spending. “My role in the city is [to say] ‘no’ [to spending], and I have been often called ‘Dr No’,” he had said.
At the core of this Gandhi’s fiscal philosophy are two principles: you shall not spend a penny more than what you earn; and you shall borrow smartly and only when it is necessary. “We borrow money [only] for long-term capital investment — roads, bridges, technologies, schools, recreation centres,” he had said.
As old-school as it seems, it is this fiscal prudence that is allowing him to leave office on June 1 with his head high and with a budget surplus of $417 million. The man who once called himself the “Supreme Bean Counter of the nation’s capital” is aware of his place in the administrative history of Washington. He wrote in his resignation letter to mayor Vincent Gray: “I feel comfortable retiring at this time because the city is in excellent financial condition, perhaps the best in its history.”
There is a valuable lesson in the success of Gandhi, 72, who holds an LLB and BCom in accounting from the University of Bombay, a master’s degree in business administration from Atlanta University and a doctorate in accounting from Louisiana State University.
Most Indian cities suffer from the same financial malaises that DC was a victim of in the pre-Gandhi era: lack of adequate tax revenue, fiscal imprudence and living beyond means. They would do well if they take a page from Natwar Gandhi’s fiscal philosophy.