An insider's tell-all tales

In his revealing memoir, former finance secretary Subhash Chandra Garg offers a glimpse into what goes on behind closed-door meetings and in the corridors of power

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Author: Subhash Chandra Garg

Publisher: HarperCollins

Pages: 494+XXIV

Price: Rs 799

There are a handful of finance secretaries of the Union government who have suffered their tenures being cut short unceremoniously. Subhash Chandra Garg is one of them. In July 2019, he was transferred to the power ministry within days of the Union Budget being presented.

Like the transfers of Piyush Mankad to the ministry of industry in 2000 and of Arvind Mayaram to the ministry of minority affairs in 2014, Mr Garg’s transfer was seen as a sign of his falling out of favour with the government. Not surprisingly, Mr Garg had decided to seek voluntary retirement more than a year before he was due for superannuation.

But unlike the other finance secretaries, Mr Garg has chosen to recount in detail what, in his view, caused his sudden exit from North Block. Usually, civil servants refrain from such explanations. Even if they do, those disclosures take place after several years. Mr Garg, however, has written this reveal-all book in just about four years of his exit from government. That makes it an almost unique exercise by any retired civil servant.

His narrative on the developments that led to his transfer from the finance ministry suggests that it was not just a case of Finance Minister Nirmala Sitharaman having little confidence in him; his equation with the Prime Minister’s Office (PMO) and the Prime Minister had turned a little sour, too. As a senior PMO official put it, “We cannot change the finance minister. Therefore, you [Subhash Garg] will have to make way.” According to Mr Garg, he had already begun mulling the idea of taking voluntary retirement and that conversation led to his decision to dash off the letter seeking premature retirement even as he received his transfer order.

Mr Garg’s departure from the finance ministry also seemed to have been hastened by his uncompromising stance as the member of the expert committee to decide the economic capital framework for the Reserve Bank of India (RBI). The author insisted on a formula that would provide a higher share of RBI’s profits to be transferred to the government, a view with which other committee members did not agree. His decision to insist on a dissent note also upset the finance minister and PMO officials. The stalemate could be resolved only after Mr Garg was shifted out of the finance ministry.

Written with clarity, this memoir does not pull punches while focusing on the author’s stint in the finance ministry of about two years. In the process, it reveals details of developments within the government that have so far remained under wraps for obvious reasons. For instance, Mr Garg’s frosty relationship with the finance minister was no secret. But his book reveals for the first time how the relationship soured and the circumstances under which her written Budget speech of 2019 became one of the longest even as it failed to mention the fiscal deficit target for 2019-20.

Similarly, the RBI Governor Urjit Patel’s growing unease with the government leading to his resignation almost a year before his three-year tenure ended was also no secret. What Mr Garg’s book reveals was how the Prime Minister was upset with the RBI governor at a meeting in the PMO to take stock of the Indian economy. The author notes that the RBI governor also took a tough line on insisting that the electoral bonds should be issued by the central bank through digital mode, defeating in his view the main purpose of hiding the identity of the donors.

Mr Garg’s book also brings out eloquently the kind of pressure that the PMO puts on the finance ministry in Budget-making. One of the first assignments that the author undertook after joining the finance ministry in July 2017 was to ward off pressure from the PMO to junk the second volume of the Economic Survey for 2016-17, which was due to be presented in the monsoon session of Parliament in 2017. The PMO believed that the Survey had expressed some views that the government was not comfortable with. Mr Garg succeeded in toning down the content without losing the focus of the Survey. Even in Budget-making, Mr Garg’s book shows, the space available to the finance ministry for framing proposals independently appears to have shrunk by a significant margin.

Mr Garg also relates with remarkable candour the inside stories of how the government went about tackling the collapse of Infrastructure Leasing & Financial Services (IL&FS), how the pace of privatisation slowed and how a novel but controversial way was found to recapitalise banks. All these developments have been outlined in a manner that would establish the author as an accomplished storyteller.

There are many such engrossing anecdotes recounted here that will undoubtedly whet the appetite of those hungry to know more about what goes on behind closed-door meetings or in the corridors of power. But there are at least two caveats. One, his narrative ignores how and under what circumstances the Budgets during his tenure projected unrealistic revenue numbers and sought greater recourse to off-budget borrowings, which undermined the credibility of fiscal numbers.  Even his rendering of what the Shankar Acharya Committee had recommended on changing the financial year appears to be imprecise. And the second caveat is that Mr Garg’s narrative appears to be a reflection of his perspective and his personality.

It could be argued that the perspective of the finance minister, the RBI governor or the PMO officials on all the issues that Mr Garg outlines may not be similar. Perhaps one has to wait for similar narratives from them in the days to come. The sooner they come, the better for observers of policymaking to conclude how precisely these momentous developments took place.