FM Sitharaman insisted on my transfer from North Block, says S C Garg

A year after his voluntary retirement from the service, former finance secretary Subhash Chandra Garg claimed that he did not share a “good and productive” working relationship with Finance Minister Nirmala Sitharaman and she was among the key reasons for his abrupt exit from the government.

“Nirmala Sitharaman, has a very different personality, knowledge endowment, skill-set and approach for economic policy issues and also for the officers working with her. It became quite apparent very early that working with her 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,” Garg said.

In a long blog post, Garg claimed that FM Sitharaman had insisted on his transfer from the Ministry of Finance in June 2019.

Garg had in July last year, formally sought voluntary retirement from his service, hours after the government issued orders transferring him to the Ministry of Power. Same day, last year, ( October 31, 2019), he was relieved from his service.

He said, "(Sitharaman), for reasons not very clearly known to me, came with some pre-conceived notions about me. She did not seem to have confidence in me. She was not quite comfortable working with me as well."

"Serious difference 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," he added.

Garg was Secretary at Department of Economic Affairs (DEA), when the Reserve Bank of India governor Urjit Patel resigned amid the reports of rift between the government and the central bank. It is believed that it was triggered by the Ministry of Finance seeking RBI’s surplus cash reserves. Garg in the blog further claimed that few acrimony during the Union Budget exercise, made the working environment unpleasant.

"The Department of Economic Affairs is the place where an officer gets the widest possible view of the Indian economy and participates, in various ways, in the decision making relating to the policy framework for entire economic part of the government. I did not want to work in the government outside the ministry," he said.

Another reason for quitting the government was distracted economic policy from what was required to attain stated goal of building a $10 trillion dollar economy by early 2030s, he claimed. According to the Garg, the government did talk about making India a $5 trillion economy by 2024- 25 after the elections and winning by 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.

"The Government was turning populist as well. As part of a 100 days programme, a number of announcements were made aimed to please specific constituencies.... While the real economic reform agenda seemed like getting relegated to a side-show, the non-economic priorities started assuming primary space," Garg pointed out.

He also mentioned that Dr P K. Mishra, then Additional Principal Secretary, who oversaw appointments and transfers in the PMO, "asked me to come over for a chat on 18th July... Both of us agreed that the best course would be for me to make way for the new FM to ‘function smoothly’.”