ET Policy Change Agent: TV Somanathan- Nothing’s off Budget, and nothing’s off limits to move the economy

The past few budgets of the government have drawn all-round praise for bringing transparency and credibility to the numbers. From the cleaning-up of hidden subsidies to improving efficiency in expenditure management through the single nodal account system, finance secretary TV Somanathan has quietly pushed through significant changes in the way the government handles its finances. The jury noted Somanathan’s contribution towards these areas when picking him for the ET Policy Change Agent award.

“There is no below-the-line item. There is no EBR (extra-budgetary resources) and borrowing,” said one jury member. Extra budgetary resources, the oft-criticised part of the budget that masked the government’s true liabilities, dropped to nil in FY23 from a peak of `1.62 lakh crore in FY19.

The budget discontinued the practices of issuing recapitalisation bonds, another off-budget item, and instead asked banks to raise funds from the market on the strength of their balance sheets.


Somanathan, a PhD in economics, took over as expenditure secretary in the finance ministry in December 2019, months before Covid-19 struck India. He became finance secretary in April 2021.

Identifying capex push as central to the government’s support for the economy battered by the pandemic and twinning it with reforms such as the new public sector enterprises policy, Somanathan managed to spearhead critical changes at the policy level.

This included an innovative push through additional dedicated funds to states for capital expenditure. States were paid grants in advance to quickly start spending.

“It is of course an honour to be so chosen, for which I thank you,” Somanathan told ET.

From a delicately negotiated arrangement with states to borrow funds from the market to bridge the gap in Goods and Services Tax (GST) compensation cess to a crucial package to support beleaguered private telecom companies, he brought unconventional measures to the table when the situation warranted. To push last-mile reforms, Somanathan ensured that additional borrowing by states was tied to reforms such as in the power sector, and public food distribution, including the one-nation, one-ration card scheme.

When the economy was still in the grip of the pandemic, the government launched the Aatmanirbhar Bharat initiative to foster self-reliance in strategic areas. The initiative has led to the Production-Linked Incentive (PLI) programme to reboot the manufacturing sector. Somanathan has been involved in the design of a number of these PLI schemes.

He also pushed the idea of the National Monetisation Pipeline that seeks to leverage assets worth `6 lakh crore over a five-year period (2021-2026) to create additional revenue to fund infrastructure development. A bad bank has also been set up to ensure better management of non-performing assets as embattled staterun banks were nursed to health. Record credit growth even as the world economy struggles demonstrates its success.

Better expenditure management has helped fund safety nets such as the Pradhan Mantri Garib Kalyan Rojgar Abhiyaan or the Pradhan Mantri Garib Kalyan Ann Yojana. Other reforms under his watch included changes in procurement rules to make government contracts transparent, and an e-marketplace for purchases.