New Delhi: T.V. Somanathan, currently the top civil servant in the Ministry of Finance, and now appointed as the top civil servant in the Government of India, has always been something of an overachiever — from his time as a student, to his days as a probationary officer, to working in the Prime Minister’s Office.
Never one to mince words, Somanathan has been quite vocal about his belief that the government should tax economic activities, especially those it found had no merit in, and has even bluntly commented about the private sector in a way not often heard by those in the government.
During his time at the finance ministry, he has been a vital advisor not just to Finance Minister Nirmala Sitharaman, but also to Prime Minister Narendra Modi.
“The Appointments Committee of the Cabinet has approved the appointment of Shri T.V. Somanathan as Cabinet Secretary with a tenure of two years starting 30.08.2024,” the Appointments Committee of the Cabinet said in a notification, adding that Somanathan would serve as an officer on special duty in the Cabinet Secretariat until he takes over as cabinet secretary.
Somanathan, a 1987-batch IAS officer of the Tamil Nadu cadre, will succeed Rajiv Gauba.
Top achiever from the beginning
Somanathan distinguished himself even before he joined the civil service with skills that would see him stand out even later in his career.
A chartered accountant, cost accountant and company secretary by training, he is a member of the the Institute of Chartered Accountants in England and Wales, the Chartered Institute of Management Accountants, London, the Association of Chartered Certified Accountants, London, the Institute of Company Secretaries of India and the Institute of Cost Accountants of India.
“His ability to understand numbers, the nuances behind them, and the skill with which he can sort through them and get to the crux of a company or government’s finances is remarkable,” a senior official in the finance ministry, who had worked closely with Somanathan during the COVID-19 pandemic, had remarked at the time.
“But what’s even more remarkable is the speed with which he does it,” the official added.
Somanathan also holds a bachelor of commerce degree from Panjab University, a master of arts degree from the same university, an executive development program diploma from Harvard Business School, and a PhD in economics from Calcutta University.
“It’s rare to see such a highly qualified civil service officer,” the official had remarked when asked about Somanathan’s record. “But Somanathan stood out from even his early days.”
Somanathan joined the civil services in 1987 after having secured the second all-India rank, after Amir Subhani from Bihar, who retired as chief secretary of Bihar and is currently the chairman of the Bihar Electricity Regulatory Commission.
On joining, and following his training, Somanathan was awarded the gold medal for the best IAS probationer of his batch, setting the standard for his later career.
In 1996, Somanathan joined the World Bank in Washington through the Young Professionals Program as a financial economist. Soon after, in 2000, he became one of the World Bank’s youngest sector managers when he was appointed manager of the Budget Policy Group, according to Nomura.
A varied career
Somanathan has had a varied career so far, having served in state governments, at the Centre, including in the Prime Minister’s Office, and even representing India at the international level, at the World Bank.
Through all this, he also wrote numerous books and articles. In 1998, he authored a book titled Derivatives, published by McGraw Hill Education, and has contributed chapters to the books Land Reforms in India, published by Sage Publications in 2003, and Public Institutions in India, published by Oxford University Press in 2005.
At the state level, Somanathan has been the deputy secretary (budget) in Tamil Nadu, as well as joint vigilance commissioner, secretary to the chief minister between 2007 and 2010, and additional chief secretary & commissioner of commercial taxes in the state.
Soon after, however, he moved out of the state to take over as joint secretary in the Ministry of Corporate Affairs during 2010-11, and was then deputed to the World Bank, where he served as a director representing India till 2015.
He was then called to the Prime Minister’s Office, where he served between 2015 and 2017, first as a joint secretary and then as an additional secretary.
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Time at the Ministry of Finance
Somanathan took over as the secretary in the Department of Expenditure in the Ministry of Finance in December 2019, just before the pandemic hit. Those in the ministry at the time spoke about how he was instrumental in helping devise the government’s pandemic response, including acting as a vital link between the bureaucracy in the finance ministry and the Prime Minister’s Office.
He is also credited with working closely with Sitharaman in bringing about much greater transparency to the government’s budgets, including moving off-budget borrowings into the government’s accounts, something that has been lauded by economists and ratings agencies alike.
“The FM has a lot of respect for him,” a senior official in the finance ministry said. “She listens to what he has to say, not just because of the fact that he knows what he is talking about, but also because he is close to the PMO.”
As is the convention in the Ministry of Finance, Somanathan — who became the senior-most civil servant in the ministry in 2021, took on the role of finance secretary along with his existing designation as expenditure secretary. From then on, his advice to the finance minister expanded in range, with officials also crediting him with several tax initiatives.
Quick to bring in new taxes
Somanathan’s actions on taxations are among the hallmarks of his time at the finance ministry. For example, officials in the ministry say he was responsible for the 2023 decision to impose a tax collected at source (TCS) on credit card transactions done abroad, as well as that year’s budget decision to increase the rate of TCS to 20 percent on all foreign transactions.
The government received significant backlash for the decision, and later retracted the provision including credit card transactions under TCS.
Similarly, Somanathan was quite vocal about his keenness to increase taxes on futures and options, as implemented in this year’s Budget. In a post-Budget interview, Somanathan told ThePrint that the move “was a signal, and an attempt to collect some tax revenue from an activity which we think is perhaps not a merit activity in the volumes it is happening in”.
The Union Budget 2024 had increased the rate of the securities transaction tax (STT) on the sale of an option in securities from 0.0625 percent to 0.1 percent of the option premium, and on the sale of a futures contract in securities from 0.0125 percent to 0.02 percent of the price at which the futures are traded.
“I am not convinced that tax changes alone will bring trading volumes down to reasonable levels, but I think it will help,” he said. “At any rate, I would like to collect tax on it, if somebody is doing something which we don’t think is of merit.”
Blunt views on the private sector
During the same interview, Somanathan also voiced his views on the private sector’s investment activities in a manner not often heard from other civil servants, who tend to be more circumspect in their commentary on corporate India.
“They never tell us the truth, they are too polite with us,” he lamented, when asked about what the private sector leaders tell him about why they are not investing.
“Typically, they tell us what they want from us, rather than what they are actually doing,” he added. “When we meet them, they always want tax cuts, they always want subsidies.”
He was quick to add that this was not a criticism of the private sector, but also made it clear that this behaviour of the private sector also meant that he — as the top civil servant in the nodal economic ministry in the government — did not know why the private sector was not investing.
(Edited by Rohan Manoj)
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