Retirement decision not linked to transfer, says ex-finance secy S C Garg

He says no one in govt had opposed sovereign bonds

Subhash Chandra Garg, who announced voluntary retirement soon after being appointed as power ministry secretary, has clarified that his decision to quit the IAS is not linked to his transfer.

He said he informed the Prime Minister’s Office (PMO) earlier this month about his retirement plan. “I had discussed my voluntary retirement with the PMO on July 18, much ahead of the transfer order. There is no connection between the two. I formally submitted the application on July 24,” he said. 

When asked about the Budget proposal on sovereign bonds, that has raised quite a stir, Garg said that while he was in the finance ministry, no one had opposed the idea. In a major bureaucratic reshuffle, he was shifted to the power ministry on Wednesday. The issuance of overseas bonds was estimated at $10 billion. 

“The sovereign bond issuance is intended to ease pressure on domestic availability of resources, especially private sector. It was a very well considered decision, has enormous benefits and risks are much less. During the time I was there (finance ministry), I didn’t hear anyone, including the government, questioning it,” said Garg, while addressing the media after taking charge at the ministry of power on Friday.

He said India’s external liabilities are very small and make for a perfectly legitimate case to consider sovereign bonds. 

“Of the G20 countries, 19 issue sovereign bonds. So, India will not be the only one to do that,” he said.

On July 17, Garg refused to sign on the report finalised by the former Reserve Bank of India (RBI) governor Bimal Jalan-led committee reviewing the central bank’s economic capital framework (ECF), this paper reported on Friday.

When asked about this, Garg said the report is not final. “I have been saying this; the committee is still deliberating on it. So now, those deliberations will be taken forward by new representatives of the department. The committee has not come to any conclusion.”

Replying about his plans for the power sector, he said improving the financial condition of power generation and distribution companies (discoms) are his top priorities. “There are several very important issues in the power sector, distribution reforms and finances of the sector. There are some places where the PPAs (power purchase agreements) are being questioned. We have to bring stability to the sector. There are tariff policy issues that are very important and need to be finalised.”

Regarding another round of financial bailout of state-owned discoms, Garg said this was done three or four times and had not worked. “So we have to look at newer ways,” he said. 

The BJP government, in its first term, launched the UDAY scheme for turning around discoms. 

The financial part was concluded with discoms issuing bonds against their debt; operational improvement is still not achieved, leading to discoms making losses again.

‘Informed PMO about VRS on July 18’
 

• Garg said he had informed the PMO onJuly 18  about his retirement plan
• He defended the Budget proposal of raising resources via issuance of overseas sovereign bonds
• The issuance was estimated at $10 billion
• He said external liabilities are very small and make for a legitimate case to consider these instruments
• Of the G20 countries, 19 issue sovereign bonds. So, India will not be the only one