In Top Bureaucrat's Transfer, Link Seen To Sovereign Bond Plan: 10 Points
- Reports about Prime Minister Narendra Modi's office calling for a review emerged after senior bureaucrat Subhash Chandra Garg was shifted from the finance ministry to the power ministry on Wednesday.
- News agency IANS quoted sources as saying Mr Garg's shift was linked to the fact that the PM's office was "unhappy" about the bond proposal.
- The Prime Minister's Office was not properly briefed about the consequences of overseas dollar-denominated bonds by Mr Garg, who had originally pushed this idea, the agency quoted sources as saying.
- The Finance Minister announced the offshore bond sale plan in the budget, amid shrinking options to raise funds to boost spending on infrastructure.
- The idea has been criticised by former heads of the Reserve Bank of India, economists and allies of the ruling BJP alike; they argue it could create long-term economic risks by exposing the government's liabilities to currency fluctuations.
- As an alternative, the government could raise funds through rupee-denominated bonds in the overseas market instead, Reuters quoted a source who is an adviser to the government.
- Mr Garg - who was the senior-most bureaucrat in the Finance Ministry - applied for voluntary retirement on Thursday, becoming the first Finance Secretary to do so in 19 years. If his request is accepted, he will leave government service more than a year before his scheduled retirement.
- As Secretary in the Department of Economic affairs, he was in charge of fiscal policy, Reserve Bank of India-related matters, and was closely involved in the Budget.
- He was a central figure in the tension between the government and the RBI last year, which ended with the sudden exit of Urjit Patel as RBI governor in December.
- Declining to comment on the sovereign bond plan, Mr Garg said on Thursday that he had sought voluntary retirement but would serve out a notice period of three months and take charge as power secretary until then.
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