New Delhi: A day after his transfer to the Power Ministry, former Finance Secretary Subhash Chandra Garg has decided to avail of VRS. He was the senior-most bureaucrat in the Finance Ministry and abruptly shunted on Wednesday.
Garg’s sudden shifting, just after the Budget presentation and its approval by Parliament, is being seen by many as paying the price for pushing the idea of sovereign overseas bonds, which has ruffled the swadeshi feathers of the RSS.
The opposition to the proposed bond is widespread. Rathin Roy, member of the Economic Advisory Council to the Prime Minister, had recently said the government should not issue such bonds without getting into larger public consultations; also, he said government should pay attention to what several former Governors of the Reserve Bank of India are saying -- that sovereign liabilities are in perpetuity.
Roy also dismissed the contention that such bonds are cheaper after the hedging costs are added. Noting there was a reason why the country hadn't issued overseas debt for 70 years, he had said that Brazil, Argentina, Turkey, Greece, and Indonesia had all paid a price for foreign currency sovereign borrowings.
Sources told NDTV that Garg came to his office in the North Block -- the seat of Finance Ministry -- in the morning, but left after noon.
The departure of Garg has left the bond market uneasy, and understandably so. Garg’s departure in itself does not necessarily imply that the overseas sovereign bond project would be shelved, but the circumstances around his exit do raise doubts.
The fact that the proposal to issue overseas bonds has been announced in the Budget does not compel the government to see it through. The government can always cite the lack of a compelling need, and an uncertain global environment, for putting the plan on an indefinite hold.
The plot has thickened with the Prime Minister’s Office said to be favouring the issuance of rupee-denominated sovereign bonds overseas, instead of those denominated in foreign exchange.
An overseas bond issue in rupees would mean that the currency risk will be borne by the investors.
By Pratigya Vajpayee
