New Delhi: Hasmukh Adhia, the bureaucrat handpicked by Prime Minister Narendra Modi to oversee economic policies from his eyrie in the North Block, appears to have lost some of his sheen and could be sulking after cabinet secretary P.K. Sinha wangled a one-year extension on Tuesday. The bureaucratic dovecotes have been aflutter ever since Adhia went on a fortnight’s leave last Saturday after a meeting of the GST Council that failed to hammer out a consensus on a controversial proposal to impose a sugar cess of Rs 3 a kilo that was widely regarded as a badly needed sop to sugarcane growers in election-bound Karnataka.
Adhia has reportedly retreated to a yoga and meditation centre in Mysore run by Swami Visharadanand Saraswathy. A note from the department of personnel and training said expenditure secretary Ajay Narayan Jha would assume charge of Adhia’s bailiwick – revenue – during his absence.
Adhia’s holiday is even more remarkable because finance minister Arun Jaitley has not been attending office for over a month as he waits for a kidney transplant.
Congress leader Rahul Gandhi tweeted: “Dear FM (finance minister), as you are indisposed and finance secretary is on vacation with his guru on a quest for inner peace, I have decided to shut the finance ministry till further notice. The PMO will take all financial policy decisions as before. Prime Minister.”
There was a strong buzz in Delhi’s corridors of power that Adhia, a Gujarat-cadre IAS officer believed to be extremely close to Modi, was the clear frontrunner for the cabinet secretary’s post after Sinha demitted office.
Although petroleum secretary K.D. Tripathy is the senior-most bureaucrat in the Modi administration, most civil servants had expected Adhia to climb to the pinnacle.
Last September, Adhia was designated as the finance secretary after the retirement of Ashok Lavasa.
A topper from Ahmedabad’s HR College in accountancy, a gold medallist from IIM Ahmedabad, and a doctorate in yoga from Swamy Vivekananda Yoga University, Bangalore, Adhia had served as principal secretary to Modi when he was Gujarat chief minister and additional chief secretary looking after finance in that state. After Modi’s victory in the 2014 general election, he came to Delhi’s North Block .
But Adhia’s luck appeared to have run out after a chain of events put him in a very tight spot, giving critics the opportunity to discredit him. The first sign of trouble came in mid-January when rogue diamantaire Nirav Modi fled India after perpetrating a Rs 14,000-crore fraud on state-run Punjab National Bank, leaving the Enforcement Directorate, which reports to Adhia, red-faced.
Soon after, there were reports saying Adhia had in 2016 received two gold biscuits, a silver coin and an iPhone7 from unknown people, apparently worth Rs 1.74 lakh. On the advice of the cabinet secretary, Adhia had deposited these Diwali gifts with the government toshakhana run by the external affairs ministry, where public servants have to deposit all gifts worth more than a token sum received from foreign governments.
But the final straw appears to have been the deep embarrassment the government suffered when it was persuaded to reverse a decision taken by Adhia to go along with the UPA’s plan to retain the GSTN – a repository of sensitive tax data – as a private entity.
The GSTN had been registered as a Chapter 8, non-profit company with 51 per cent shareholding in the hands of private entities like LIC Housing Finance, HDFC, HDFC Bank, ICICI Bank and NSE Strategic Investment Co. The government held the remaining 49 per cent.
Last Saturday, the GST Council decided to take control of the 51 per cent stake in GSTN held by the private entities and farm it out equally between the Centre and the states. The decision was taken after several lobbyists had red-flagged the risk of a potential data breach at a privately controlled GSTN.
Recent data leaks from the Aadhaar portal had deepened concerns about housing critical data relating to citizens with a private organisation.
The campaign against Adhia was spearheaded by maverick parliamentarian Subramanian Swamy who tweeted last Friday: “I demand finance secretary Adhia be transferred to another ministry like textiles for his role in the GSTN scam.”
“That was the first indication that Mr Aadhia was no longer the golden boy,” said a top finance ministry official.
A revolt in the GST Council against the sugar cess – meant to subsidise costs for sugar mills which have been struggling to stay afloat because of weakening market prices in the wake of a production glut – didn’t help matters, either. As a result, the sugar mills have been unable to pay sugarcane farmers their arrears, which have crossed Rs 18,000 crore, igniting resentment against the Modi government before a crucial state election.