Felt working with Sitharaman may not be conducive to economic reform, growth — ex-FinSec Garg

Subhash Chandra Garg, who had taken voluntary retirement last year, said Nirmala Sitharaman's first budget lacked major reforms, and was all praise for Arun Jaitley.

File image of Subhash Chandra Garg | ANI Photo

New Delhi: Finance Minister Nirmala Sitharaman insisted on transferring then finance secretary Subhash Chandra Garg out of the ministry within a month of her assuming office, Garg has alleged.

In a blog published on Saturday, Garg, who took voluntary retirement from the Indian Administrative Service last year, said it became quite apparent “very early” that working with Sitharaman was going to be quite difficult and “it might not be conducive to undertaking necessary reforms for the attainment of the objective of building a $10 trillion economy of India”.

According to Garg, Sitharaman had a “different personality, knowledge endowment, skill-set and approach for economic policy issues and also for the officers working with her”.

“She, for reasons not very clearly known to me, came with some preconceived notions about me. She did not seem to have confidence in me. She was not quite comfortable working with me as well,” he said.

Gard said the then additional principal secretary to the Prime Minister, P.K. Mishra, had discussed his relationship with Sitharaman and it was agreed that the best course would be for Garg to make way for the new minister so she could “function smoothly”.

He further added that serious differences also developed on some key issues like economic capital framework of RBI, package for dealing with problems of non-banks, resolution of non-banks, partial credit guarantee scheme, capitalisation of non-banks like IIFCL and other financial entities and the like.

“Very soon, not only had our personal relationship soured, but the official working relationship also become quite unproductive.”

ThePrint reached the finance minister’s office for a comment, but did not get a response till the time of publishing this report.

This is the first time Garg has directly blamed Sitharaman, who took over as finance minister in the last week of May 2019, for his exit. In the past, he said some of his decisions may have not kept his bosses in good humour while talking about his unceremonious exit. He was, however, effusive in his praise for Arun Jaitley, Sitharaman’s predecessor.

Garg, a 1983-batch IAS officer of the Rajasthan cadre, was appointed secretary, economic affairs, in the Ministry of Finance in June 2017 and was designated finance secretary in March 2019. The senior-most secretary of the five secretaries heading various departments in the ministry is appointed the finance secretary.

Garg was transferred to the power ministry in July last year and eventually left the service in October 2019. If Garg had continued in service, he would’ve retired this month.

‘2019-20 budget had no major economic reform’

Garg also criticised the 2019-20 budget, Sitharaman’s first budget presentation as finance minister. Calling it a “recital of great work done in the previous five years”, Garg said that it did not have a single major economic reform.

“Some proposals for reforming sectoral foreign direct investment limits, issuing foreign currency sovereign bonds, selling shares below the 51% limit in case of the public sector, which I could push through, were not good enough to alter the course of the economic system materially,” he said.

He said the budget was due to be presented on 5 July, within 35 days of Sitharaman taking over as finance minister. “Despite quite a few episodes of acrimony which had made the working environment unpleasant, I decided that I would do everything possible to see that the budget was not harmed and it was delivered on time,” he said.

The government did talk about making India a $5 trillion economy by 2024-25 after the elections and winning a great majority. But the reform agenda and the investment plan for attaining the goal of $10 trillion economy articulated in the Interim Budget 2019-20 however, got side-tracked and was virtually forgotten, he added.

Garg said the expectation was that the Modi government, after winning the elections, will embark on major reforms to revive a slowing economy.

“I had expected the Government to take the requisite bold reforms in the first six months. However, this did not seem to be the case. While the real economic reform agenda seemed like getting relegated to a side-show, the non-economic priorities started assuming primary space,” he added.

‘Jaitley was a mastermind, had right temperament’

Garg, who also worked under late Union Minister Arun Jaitley, described the tenure as the ‘best of the time’, both personally and professionally.

Jaitley was a “mastermind with an uncanny ability to sift through massive amounts of information and government files to discover the pith and substance of the public policy issue involved. He also had the right temperament and ability to forge consensus,” he said.

“Shri Jaitley focused on broader policy issues. He left the running of the departments and implementation of policies to the Secretaries. He genuinely encouraged contributions on major policy issues to come from the Secretaries. He made the Secretaries present the policy proposals to the Prime Minister’s Office as well as to the media and the public. He was a very magnanimous and broadminded person,” Garg said.