Former finance secretary Subhash Chandra Garg is not new to controversies or to public disagreements.
Be it the public spat between the government and the Reserve Bank of India last year or his disagreements with the Bimal Jalan panel or the more recent controversial decision to raise funds through sovereign bond overseas in external currencies, Garg had an eventful stint in the finance ministry.
He became one of the rare Indian bureaucrats who chose to seek an early retirement this week from the lucrative Indian Administrative Service. He declared his plans a day after being shunted out to the power ministry, but clarified a day later that the decision to early retirement was discussed with the Prime Minister’s Office last week before the transfer order.
The senior-most person among the five secretaries in the Ministry of Finance is designated as the finance secretary. Only the cabinet secretary has a higher position than him or her. Garg ‘s decision, and the events preceding it, came as a surprise as he was a Narendra Modi government appointee.
Also read: Subhash Garg resignation has few precedents — last senior officer quit 33 years ago
Garg, a 1983 batch Rajasthan cadre IAS officer was brought in as secretary, department of economic affairs in June 2017 from the World Bank, where he had almost a three-year stint. He was designated the finance secretary as recently as March 2019 by the appointments committee of the cabinet.
He was due to retire in October 2020, but will now retire a full year before his service was to end.
Garg, after handing charge to his successor Atanu Chakraborty, exited North Block with a broad smile, but did not answer the questions hurled at him by reporters looking for a confirmation of his request for voluntary retirement. Later in the evening, Garg tweeted about his plans.
“Handed over charge of Economic Affairs today. Learnt so much in the Finance Ministry and Economic Affairs Dept. Will take charge in Power Ministry tomorrow. Have also applied for Voluntary Retirement from the IAS with effect from 31st October. Last tweet from this handle.”
Garg was known to be not very open to differing views or criticism. He surprised many by openly taking on then RBI deputy governor Viral Acharya.
Responding to Acharya’s warnings that governments that don’t respect central bank independence face the wrath of the markets, Garg had tweeted: “Rupee trading at less than 73 to a dollar, Brent crude below $73 a barrel, markets up by over 4% during the week and bond yields below 7.8%. Wrath of the markets?”
But Garg was backed by the government then.
Also read: Shunted to power ministry, finance secretary Subhash Garg opts for voluntary retirement
What seems to have led to his sidelining this time around is the Budget proposal to raise funds from sovereign bond issuance overseas in external currencies—a move that has been criticised by many, including former RBI governors Y.V. Reddy and Raghuram Rajan, members of the Prime Minister’s economic advisory council Rathin Roy and Shamika Ravi, and the RSS-affiliated Swadeshi Jagran Manch. Raising funds through this route makes India vulnerable to fluctuations in currency markets and increases external sector risks, they had argued.
Garg also stridently pushed for a one-time transfer of RBI’s reserves to the government in the meetings of the Jalan committee looking into the capital economic framework.
The panel eventually favoured a phase-wise transfer of RBI’s resources prompting Garg to write a dissent note.
Garg did not attend at least two of the meetings, and is said to have left before the last meeting of the panel concluded.
Similar to his tenure, Garg has also chosen to exit also on his own terms.
Kehna bahut mushqil hai, what finally drove gentleman to quit. Read Ms Tavleen Singh’s column, which describes the funk in Bombay over the Budget. The signs of economic slowdown / recession are unfolding in each sector of the economy. For both those who voted for the government and those who did not, the general election was seen as a sort of necessary distraction, something to be gone through before the urgent tasks of economic repair and reconstruction could be taken up. The Budget, unfortunately, communicates the nonchalance of business as usual. Another column from S A Aiyar, about how foreign investors are leaving. Another five years such as the last five would be intolerable. No circus lively enough to distract the populace from bread. Better to start getting a grip over the economic situation before it overwhelms us.
Probably Disgusted with superior s
Think of the Finance Secretary as akin to the Chief of Defence Staff – not so far created -, a single point of consolidated expert advice to the political executive on all matters pertaining to the economy. So if the economy is becalmed, has been so for several years, that does not reflect well on his caliber. Either he is failing to give the best possible advice or it is not being accepted. Very difficult, as a neutral observer, to endorse the aggression – verging on desperation – to hoover up the RBI’s reserves in one stroke. Borrowing abroad in foreign currency is something on which a more intense internal debate ought to have been carried out. One cannot quarrel with a decision to do so, while disagreeing with it. All the fudge that has been taking place on sacrosanct numbers, whether it is the fiscal deficit or the rate at which the economy is growing, all this is the FS’s domain.