Port Wings News Network:
22 November 2017
The BJP was searching for a perfect plank to change the narrative on economic growth in the country just before the Assembly Elections in Gujarat, and Moody’s rating gave it.
It was a huge shot in the arm for Modi-government’s reforms, as global rating agency Moody’s Investors Service upgraded India’s local and foreign currency issuer ratings to Baa2 from Baa3 and changed the outlook on the rating to stable from positive.
Notably, Moody’s has revised the sovereign rating of India a notch above investment grade after a long gap of 14 years. Moody’s says that the reforms being pushed through by Modi’s government will help stabilize rising levels of debt. This one-level shift from the lowest investment-grade ranking puts India in line with the Philippines and Italy.
Many top market voices and economists welcomed the news, saying that this recognises the efforts of the Modi government, to put India on the path of growth.
In its report, Moody’s recognised the government’s efforts with regard to the new indirect tax regime of GST. Moody’s said that implementation of the new indirect tax regime has undermined growth over the near term, adding that it expects real GDP growth to moderate to 6.7% in the fiscal year ending in March 2018 (FY2017). Moody’s said that GST will promote productivity by removing barriers to interstate trade.
Besides all the facts and figures that helped the country to evolve over the years, there is an element of prestige also involved for the Modi Government. The previous government’s wake-up call from its reform stupor came in the form of Standard & Poor’s threatening to cut India’s credit rating to junk. That very week, Prime Minister Manmohan Singh hurriedly announced a spate of relaxation of FDI restrictions, including that of multi-brand retail.
On the other hand, the Opposition parties have accused the Centre of neglecting ground realities and indulging in propaganda based on ratings from agencies abroad to deviate the attention of people from the real issues.
Commenting on the rating upgrade of Moody’s, the Congress said it is far away from what is happening on the ground. Congress leaders stated that whether Moody’s or (Prime Minister Narendra) Modi, both were not able to understand the mood of the nation.
Congress MP Rajeev Shukla stated that whatever they say do not have any reflection of the situation on the ground.
They asked the Centre to rather focus on correcting its mistakes on the policy front than holding such ratings as a certificate of its own performance.
Furthermore, the Left parties were also equally critical of the BJP’s reaction to the ratings. CPI(M) general secretary Sitaram Yechury said such ‘ratings’ reflect the ‘ease’ of how foreign business can milk India. He added that the Modi government wants the poor, the hungry, protesting farmers, jobless and those hit by the economy crumbling, to eat these ratings.
Whatever said and done on these ratings, people as well as small traders on the ground feeling the impact of Demoneisation and GST on the other way round and it is not encouraging at all.