The Finance Ministry on Thursday has been asked by the Prime Minister’s Office (PMO) to relook the issuing of foreign currency overseas sovereign bonds, according to reports in a leading website. Wider consultation on the subject from stakeholders has been suggested by the PMO and before proceeding with any further plans, as revealed by sources who didn’t want their names to be disclosed. Moreover, the Ministry of Finance and the PMO didn’t make any comment on the matter.
Moreover, Finance Minister Nirmala Sitharaman earlier this month during her said that the government would look to issue overseas foreign currency sovereign bonds. However, the idea was criticized by former heads of the Reserve Bank of India, economists and allies of the ruling Bharatiya Janata Party who argued that the same could create risks for the long-term economy as the government’s liabilities to currency fluctuations will be exposed.
This idea was originally pushed by outgoing finance secretary Subhash Chandra Garg who didn’t inform the PMO about the consequences of overseas dollar-denominated bonds, as told to media by the source who is an adviser to the government. Reports say that the government is likely to withdraw the proposal to raise funds via overseas bonds and instead raise funds through rupee-denominated bonds in the overseas market.
Subhash Chandra Garg, who is a senior bureaucrat and finance secretary, was surprisingly transferred to the less high-profile power ministry on Wednesday. Garg has taken over as the new Power Secretary today, July 26, 2019.