Comments
A day after credit rating major Standard & Poor's unexpected warning of a possible rating downgrade, the Government swung into fire-fighting mode.
For starters, the Finance Ministry has decided to speak to S&P to address its concerns and stay or delay a future downgrade.
At the same time, it has also alleged that S&P's rating process was not transparent.
The agency, in its report released on Monday, said that slowing GDP growth and political roadblocks to economic policymaking are just some of the factors pushing up the risk that India (unsolicited BBB-/Negative/A-3) could lose its investment-grade rating. The agency had earlier revised its outlook to negative from stable.
The Economic Affairs Secretary, Mr R. Gopalan, said, “We will do teleconferencing shortly. We will explain how we are better off and how we can overcome the challenges.”
Transparency issue
He also raised the lack of transparency issue. “There may be some hidden criteria (which S&P follows), but they didn't explain it to us,” he said.
He particularly questioned the bracketing of India with some countries whose parameters are not identical. He wanted the agency to share the criteria on which it was being judged.
Mr Gopalan also said the Government was puzzled that Spain, which is going through financial turmoil, has a better rating than India.
In its teleconference with the agency, the Finance Ministry intends to focus on three things: Government Debt, Government Deficit and the External Front.
Mr Gopalan emphasised that debt had come down. Secondly, the agency takes combined (Centre and the States) figure whereas the States get some resources from the Centre according to the devolution formula, he argued.
On the deficit, he cited the Medium Term Fiscal Statement, approved by Parliament as a part of the Budget. This statement aims to bring the fiscal deficit to 5.1 per cent in 2012-13, 4.5 per cent in 2013-14 and further to 3.9 per cent of GDP in 2014-15.
He mentioned that some hard decisions on the oil front to contain fiscal deficit need to be taken and considering the urgency, the efforts are on. Interestingly, a few days ago, the Petroleum Minister ruled out reviewing diesel, LPG and kerosene prices for the time being.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.