oppn parties PMO Orders Review Of Proposal To Issue Overseas Bonds

News Snippets

  • Media person Rajat Sharma resigns as DDCA president
  • Shiv Sena, NCP and Congress postpone meeting the governor of Maharashtra
  • Shiv Sena not to attend the NDA meeting on 17th November, says break up "a formality"
  • Shiv Sena says that the confidence the BJP is showing about forming the government in Maharashtra is based purely on its expectation of getting numbers through horse trading
  • Anil Ambani resigns as director of the bankrupt Reliance Communications
  • India beat Bangladesh by an innings and 150 rums inside three days in the first Test. Indian pacers excel after Mayank Agarwal's double century
  • Sena-NCP-Congress work out a common minimum programme, will form the government soon and it will last 5 years, says Sharad Pawar
  • Income Tax Appellate Tribunal upholds the decision to withdraw the charitable status of Young India, making it liable to pay Rs 145 in income tax. Rahul Gandhi and Priyanka Vadra are the majority shareholders in the company
  • CBI raids offices of Amnesty International across India
  • Supreme Court quashes NCLAT order against Arcelor Mittal and paves the way for the company to take over ailing Essar Steel
  • Finance Minister Nirmala Sitharaman says concerns of telcos will be addressed and no company will close down
  • Government thinking of providing higher insurance coverage on bank deposits
  • Mayank Agarwal scores a double century as India take firm grip on the first Test versus Bangladesh
  • Supreme Court warns Rahul Gandhi to be more careful in future but drops contempt proceedings in the "chor" case
  • In a flip-flop, Vodafone CEO says sorry to the government, sys no plan to exit India
Supreme Court dismisses plea for review in Rafale case, says no need for roving inquiry, maintains clean chit to government
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PMO Orders Review Of Proposal To Issue Overseas Bonds

By Sunil Garodia

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Writes for a number of publications.

Is Subash Chandra Garg, the former finance secretary now shunted to the power department (he has since applied for voluntary retirement), being made the fall guy for the controversial proposal to float sovereign bonds to borrow from the overseas market as announced in the budget by Finance Minister Nirmala Sitharaman? The Telegraph has published a news story by R Suryamurthy on its front page that alleges that after criticism of the proposal from several quarters, the PMO has ordered a review and Garg is being made the scapegoat. It also hints that the proposal is most likely to be shelved. However, unnamed  government sources say Garg did not properly apprise the PMO of the consequences of borrowing through overseas sovereign bonds.

Experts, including former RBI governors Y V Reddy and Raghuram Rajan, are skeptical about the need and efficacy of adopting this route. While Reddy is of the opinion that these bonds are like sovereign liabilities in perpetuity, Rajan feels that the better way to get dollar funds would be to raise the cap for foreign investments in G-secs or government securities. Rathin Roy, a member of the Prime Minister's Economic Advisory Council, opposes the proposal because he says it will affect India's economic sovereignty and have disastrous macroeconomic consequences. Swadeshi Jagran Manch, the economic think-tank of the RSS, has also opposed the proposal.

It is surprising that Sitharaman could announce the proposal without extensive consultations within the government and with domain experts from outside. Normally a proposal of such importance (remember, India has not used this borrowing route ever before) is discussed thoroughly and even vetted by several government departments before being made public. Without going into the merits and demerits of borrowing in overseas markets by floating sovereign bonds, it needs to be stated that just an idea that was not properly discussed or approved should not have found a place in the budget announcements. It gives the impression that decisions are being made arbitrarily.