He continued to hold both the offices until general elections were called in 1989. The congress government was defeated in general elections in 1989. When Chidambaram was first given a ministerial berth, he was one among a relatively young, well educated class of men brought into government by late Prime Minister Rajiv Gandhi in 1984. Rajiv Gandhi was assassinated in May 1991 during an election campaign in the state of Tamilnadu and in general elections the following month, a sympathy wave for assassinated Prime Minister Rajiv Gandhi and a disunited opposition brought the Congress party back to power.

 Manmohan Singh, a leading economist and former Governor of the Reserve Bank of India (India’s central bank) was made Finance Minister in the new government headed by Prime Minister Narasimha Rao, essentially the first technocrat on the job in post-independent India. Manmohan Singh’s reforms began taking India away from the erstwhile Soviet-style centralised planning, into a liberalized, free market economy.

In June 1991, Chidambaram was inducted as a Minister of State (Independent Charge) in the Ministry of Commerce, a post he held till July, 1992 ; he was later re-appointed Minister of State (Independent Charge) in the Ministry of Commerce in February, 1995 and held the post till April, 1996 . He made some radical changes in India’s export-import (EXIM) policy, while in the Ministry of Commerce.

In 1996, Chidambaram quit the Congress party and joined a breakaway faction of the Tamilnadu state unit of the Congress party called the Tamil Maanila Congress (TMC). In general elections held in 1996, TMC along with a few national and regional level opposition parties formed a coalition government. The coalition government came as a big break for Chidambaram, who was given the key cabinet portfolio of Finance and put him in the limelight. Though the coalition government was a short-lived one (it fell in 1998), it exposed Chidambaram’s competency as Finance Minister, a factor that was to help him be inducted into the same key portfolio in the government formed by Prime Minister Manmohan Singh in 2004.

In 1998, the Bhartatiya Janata Party (BJP) took reins of government for the first time and it was not until May 2004 that Chidambaram would be back in Government. Chidambaram became Minister of Finance again in the congress party-led United Progressive Alliance government on May 24, 2004. During this intervening period, Chidambaram made some experiments in his political career, leaving the Tamil Maanila Congress in 2001 and forming his own party, the Congress Jananayaka Peravai, largely focused on the regional politics of Tamilnadu State ; the party, however, failed to take off into mainstream Tamilnadu or national politics. Just prior to the elections of 2004, he merged his party with the mainstream Congress party.