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FM Sitharaman says "not aware" of Subhash Chandra Garg's discussion on retirement with PMO

While Garg claimed to have discussed his plans for voluntary retirement with the Prime Minister's Office beforehand, Finance Minister Nirmala Sitharaman says she wasn't aware of any such conversation. Both, however, stand by the soundness of the overseas bond plan introduced in Budget 2019

twitter-logoBusinessToday.In | July 29, 2019 | Updated 13:07 IST
FM Sitharaman says
Garg will serve as secretary in the power ministry till the end of his notice period, October 31

While former finance secretary Subhash Chandra Garg claims to have discussed his plans of taking voluntary retirement from service (VRS) with the Prime Minister's Office (PMO) a week ahead of making his formal application, Finance Minister Nirmala Sitharaman has denied knowledge of this discussion.

"The proposal that I would take VRS was discussed with the Prime Minister's Office on July 18. Much before the transfer order. There is no connection with that [VRS]," Garg, who has been appointed the Power Secretary, told reporters on Friday after assuming charge of the Power Ministry. He asserted that there was no connection between his transfer from the high profile Department of Economic Affairs and his abrupt decision to retire.

However, Sitharaman told The Economic Times that she was "not aware" of any such conversation before his resignation letter came in. "The letter is concrete evidence which I can speak about," she said, adding that it "literally came the morning after the announcement was made".

Garg formally applied for VRS on Thursday morning, hours after the government issued orders transferring him to the Power Ministry. He will serve as secretary in this ministry till the end of his notice period, October 31. According to him there is no question of status comparison between the two roles. "We should not discuss these issues. It is the government's prerogative to decide," he said, adding that all positions of secretary are equal. He also pointed out that India's dream of becoming a $5 trillion economy cannot be achieved without the power sector.

He also sought to squash the speculation that his role in pushing for external currency sovereign bonds cost him his former job. Government officials alleged last week that Garg did not "properly" apprise the PMO of the consequences of borrowing in external currency. He had reportedly focussed chiefly on the positives. But according to Garg, nobody in the government had questioned the idea while he was the economic affairs secretary.

"Just to clear, the sovereign bond issuance which was basically intended to ease the pressure on the domestic availability of resources, especially into the private sector, was a very well-considered decision. It has enormous benefits. The risks are much less," he said.

In a similar vein, Sitharaman denied any move to review the proposal following concerns voiced by the Rashtriya Swayamsevak Sangh, the ruling party's ideological parent, and its economic wing, the Swadeshi Jagran Manch. "I am not doing any review. I have not been asked by anyone to do a review," she told the daily.

Sitharaman had announced plans for issuance of India's maiden overseas sovereign bonds in Budget 2019. But former Reserve Bank of India governors and deputy governors cautioned against resorting to this measure, something that the country had not pursued even at the peak of the crisis such as the one in 1991. Critics claim that the move would expose the country to the forex risks.

But Garg steadfastly defends the proposal on the grounds that India's external liabilities are very small. "Of the G20 countries, 19 issue sovereign bonds. So India will not be the only one to do that," he added.

With PTI inputs

Also read: Subhash Garg exit: PMO 'unaware' of implications of sovereign debt is a specious argument

Also read: Subhash Chandra Garg's exit creates uncertainty for Jalan panel on RBI reserves

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