Title: We Also Make Policy – An Insider’s Account of How the Finance Ministry Functions
Author: Subhash Chandra Garg
Publisher: HarperCollins India, 2023 (First)
ISBN: 9789356994713
Pages: 494
This book is the memoirs of Subhash Chandra Garg who was the Finance secretary of the government of India in charge of the crucial Economic Affairs department from 2017 to 2019. He was a 1983 batch IAS officer of the Rajasthan cadre. With a long stint in the finance portfolio, he had also worked as the director of World Bank in the US. He had a cordial relationship with Arun Jaitley who was the finance minister who selected him. As Jaitley fell ill, he was substituted by Piyush Goyal. Garg had a strained relationship with him. After the 2019 elections, Nirmala Sitharaman assumed charge as the minister and there was open fight between her and Garg. From the hints in the book, it is safe to assume that the author exhibited a clear streak of independence in work bordering on insubordination. We see him locking horns with other ministers too. After only 55 days of working together, Sitharaman transferred him out of finance to the less glamorous ministry of Power. This shift to a junior position upset him and he took voluntary retirement from service within three months even though Garg protests that the transfer was not the reason for his quitting. This book encapsulates the major issues handled during his tenure and the story of how the policy is formulated in the highest echelons of government. The book has definitely proved its worth in providing ‘an insider’s view of how the Finance ministry functions’ even though the emerging picture is not so reassuring because of the fuzziness of thoughts, clash of opposing visions and the slow pace of decision-making in the government.
It is well known that the postings in the highest circles of bureaucracy are controlled by the wishes of the political masters. Whether it was the result of coincidence or an engineered confluence of circumstances or a pure merit-based selection, Garg was selected as the Director of World Bank while serving in Rajasthan as the state’s finance secretary. It was equally out of the normal that he was recalled before the end of tenure and placed as the secretary in charge of economic affairs in the central finance ministry which oversees the most critical units that set policy such as budget preparation, liaison with RBI and SEBI, setting the government’s monetary policy, inflation targets and printing of currency. No wonder the author was stung when he was shifted out of the ministry.
Recently, the finance ministers of the four south Indian states vehemently complained about the unfair allocation of more financial resources to north Indian states on the basis of the 2011, rather than the 1971 census figures. The southern states performed better in birth control and as a result their population share to the total declined. This in turn reduced their share of resources. This was claimed to be based on the report of the 15th Finance Commission. Garg was instrumental in setting the agenda and guiding the Commission and this book informs that the population aspect was thought of in the initial stages itself and a compensating factor beneficial to the southern states introduced in the final report. He claims that the insistence on using 1971 figures is fiscally counterproductive. The whole objective of the Finance Commission is to determine the right amount of central taxes to be devolved to the states to meet the gap in their fiscal needs to provide a minimum and common standard of services all over the country. This required the Finance Commission to direct resources toward poorer and more populous states. Hence the better performers were given an incentive in a new way which he deliberates in full.
Garg also comments on some policy decisions which were taken in a good spirit but which did not bring in the desired results. He designates the 2016 demonetisation as ‘a misadventure’ and ‘not a clear success’. With this understatement, he examines another policy front opened by the Reserve Bank of India (RBI) without any political backing. The central bank under Urjit Patel as governor actively pushed for localization of financial and payment data. IT law did not mandate it but Patel ‘somehow got convinced that data localization was in the national interest’. There was no demand from the players, public or the government and it was very difficult for multinationals to redesign the data storage networks. The author accuses that it was entirely one individual’s preference. We see bureaucrat babus in various departments quickly ganging up for data privacy. This looked eerily similar to the license-quota-permit raj the nation dismantled in the early-1990s liberalization drive. The spectre of the license raj still haunts the corridors of power ready to pounce back at the slightest notice. This book provides many examples in which officers still think in the same way an official in the same capacity thought forty or fifty years ago. It is often the political nudge that sets the trajectory right. This book should be a warning to political visionaries who plan to reform the administration. They would do well to permanently exorcise this ghost of the socialist era, once and for all.
The current Narendra Modi regime provided a tremendous boost to the economy, catapulting the GDP from the tenth position in 2014 to the fifth slot at present. This book claims that even in the face of this huge progress, there is still scope for improvement. It still suffers due to policy paralysis in certain sectors such as the issue of sovereign bonds in foreign currency and privatization of more airports after divesting the six in 2020. Increased lethargy, lack of direction and blurred focus affect the privatization of CPSEs and asset monetization policies. Garg also summarizes the way in which the government should behave on this front. There is no reason for the government to continue in business. Its responsibility is to deliver public goods, formulate policies for businesses and redistribute income from the rich to the poor. Operating businesses is none of its business. It’s a waste of fiscal resources and governance. Privatization is the most appropriate model and the need of the hour is for the government to get out of most CPSEs producing goods and services. It need not be defensive about privatization.
Garg’s writing style is matter of fact, to the point and informational. However, it is not a pleasant read for ordinary readers. Bureaucrats may enjoy the not-clearly expressed nuances and appreciate them with their familiarity to the concerned backstage politics. This makes the narrative rather stiff for others. Besides, this book does not pack enough gossip to make it delectable for the general public. Another notable aspect is the freedom the bureaucrats possess in sticking to their stubborn positions even against the wishes of their politician bosses. Our author was on good terms with Arun Jaitley when he was the minister. After his exit on medical grounds, Piyush Goyal assumed charge. Nirmala Sitharaman took over the portfolio after the 2019 elections. Garg was at loggerheads with both of them. Sitharaman resented his continuing in the ministry and he was shunted to the ministry of power which felt like a demotion to him and he opted to take voluntary retirement with one year to spare in his normal service. In the power ministry too, he had serious differences of opinion with its minister who was himself an ex-IAS officer. Even with all these fights behind him, the author could escape almost unhurt with nothing more serious than transfers to less prestigious offices. This shows that these positions of power and good pay are also conferred with security of tenure. The author summarizes his career with a one-liner that is the pinnacle of understatement - “Life is never dull in the Ministry of Finance”. The book is not exciting, but a good read.
The book is recommended.
It is well known that the postings in the highest circles of bureaucracy are controlled by the wishes of the political masters. Whether it was the result of coincidence or an engineered confluence of circumstances or a pure merit-based selection, Garg was selected as the Director of World Bank while serving in Rajasthan as the state’s finance secretary. It was equally out of the normal that he was recalled before the end of tenure and placed as the secretary in charge of economic affairs in the central finance ministry which oversees the most critical units that set policy such as budget preparation, liaison with RBI and SEBI, setting the government’s monetary policy, inflation targets and printing of currency. No wonder the author was stung when he was shifted out of the ministry.
Recently, the finance ministers of the four south Indian states vehemently complained about the unfair allocation of more financial resources to north Indian states on the basis of the 2011, rather than the 1971 census figures. The southern states performed better in birth control and as a result their population share to the total declined. This in turn reduced their share of resources. This was claimed to be based on the report of the 15th Finance Commission. Garg was instrumental in setting the agenda and guiding the Commission and this book informs that the population aspect was thought of in the initial stages itself and a compensating factor beneficial to the southern states introduced in the final report. He claims that the insistence on using 1971 figures is fiscally counterproductive. The whole objective of the Finance Commission is to determine the right amount of central taxes to be devolved to the states to meet the gap in their fiscal needs to provide a minimum and common standard of services all over the country. This required the Finance Commission to direct resources toward poorer and more populous states. Hence the better performers were given an incentive in a new way which he deliberates in full.
Garg also comments on some policy decisions which were taken in a good spirit but which did not bring in the desired results. He designates the 2016 demonetisation as ‘a misadventure’ and ‘not a clear success’. With this understatement, he examines another policy front opened by the Reserve Bank of India (RBI) without any political backing. The central bank under Urjit Patel as governor actively pushed for localization of financial and payment data. IT law did not mandate it but Patel ‘somehow got convinced that data localization was in the national interest’. There was no demand from the players, public or the government and it was very difficult for multinationals to redesign the data storage networks. The author accuses that it was entirely one individual’s preference. We see bureaucrat babus in various departments quickly ganging up for data privacy. This looked eerily similar to the license-quota-permit raj the nation dismantled in the early-1990s liberalization drive. The spectre of the license raj still haunts the corridors of power ready to pounce back at the slightest notice. This book provides many examples in which officers still think in the same way an official in the same capacity thought forty or fifty years ago. It is often the political nudge that sets the trajectory right. This book should be a warning to political visionaries who plan to reform the administration. They would do well to permanently exorcise this ghost of the socialist era, once and for all.
The current Narendra Modi regime provided a tremendous boost to the economy, catapulting the GDP from the tenth position in 2014 to the fifth slot at present. This book claims that even in the face of this huge progress, there is still scope for improvement. It still suffers due to policy paralysis in certain sectors such as the issue of sovereign bonds in foreign currency and privatization of more airports after divesting the six in 2020. Increased lethargy, lack of direction and blurred focus affect the privatization of CPSEs and asset monetization policies. Garg also summarizes the way in which the government should behave on this front. There is no reason for the government to continue in business. Its responsibility is to deliver public goods, formulate policies for businesses and redistribute income from the rich to the poor. Operating businesses is none of its business. It’s a waste of fiscal resources and governance. Privatization is the most appropriate model and the need of the hour is for the government to get out of most CPSEs producing goods and services. It need not be defensive about privatization.
Garg’s writing style is matter of fact, to the point and informational. However, it is not a pleasant read for ordinary readers. Bureaucrats may enjoy the not-clearly expressed nuances and appreciate them with their familiarity to the concerned backstage politics. This makes the narrative rather stiff for others. Besides, this book does not pack enough gossip to make it delectable for the general public. Another notable aspect is the freedom the bureaucrats possess in sticking to their stubborn positions even against the wishes of their politician bosses. Our author was on good terms with Arun Jaitley when he was the minister. After his exit on medical grounds, Piyush Goyal assumed charge. Nirmala Sitharaman took over the portfolio after the 2019 elections. Garg was at loggerheads with both of them. Sitharaman resented his continuing in the ministry and he was shunted to the ministry of power which felt like a demotion to him and he opted to take voluntary retirement with one year to spare in his normal service. In the power ministry too, he had serious differences of opinion with its minister who was himself an ex-IAS officer. Even with all these fights behind him, the author could escape almost unhurt with nothing more serious than transfers to less prestigious offices. This shows that these positions of power and good pay are also conferred with security of tenure. The author summarizes his career with a one-liner that is the pinnacle of understatement - “Life is never dull in the Ministry of Finance”. The book is not exciting, but a good read.
The book is recommended.
Rating: 3 Star
