Media misled people on Moody’s report (on tolerance): Government

The government statement said it was “surprising that no due diligence was done” and “readers were not informed” about the difference between Moody’s Analytics and Moody’s Investor Services.

A spokesperson for Moody’s Analytics, responding to an email from The Indian Express for comments on the government statement, said: “The report was published by and is the view of Moody’s Analytics as part of its economic outlook series. The report included a section observing political developments in the context of their potential economic impact, and did not advocate any political agenda or perspective. Moody’s Analytics provides economic research and analysis and is a separate company from Moody’s Investors Service, the ratings agency.”

[related-post]

The Indian Express reported on October 30 that the “India Outlook: Searching for Potential” was issued by Moody’s Analytics, a division of Moody’s Corporation.

The report dated October 29, authored by Moody’s Analytics’ Associate Economist Faraz Syed, made a pointed reference to rising instances of religious intolerance in India.

“While Modi has largely distanced himself from the nationalist gibes, the belligerent provocation of various Indian minorities has raised ethnic tensions. Along with a possible increase in violence, the government will face stiffer opposition in the upper house as debate turns away from economic policy. Modi must keep his members in check or risk losing domestic and global credibility,” the report had noted.

Syed is based in Sydney and has been with the firm for over two years. Moody’s Analytics publishes such ‘India Outlook’ reports every quarter.

The Indian media reported the Moody’s Analytics commentary on Saturday. On November 3, in an editorial titled ‘The Costs of Hindu Extremism’ published in its international edition of the New York Times, made a reference to the Moody’s report while citing growing concerns over religious “hard-liners” and of the worries “spreading to the financial community”.

“Last week, Moody’s Analytics, a division of the bond rating and risk management company, warned that Mr (Narendra) Modi ‘must keep his members in check or risk losing domestic and global credibility’ — meaning, in so many words, its attractiveness to international investors,” the editorial noted.

The government’s note Friday said “it is also surprising that no due diligence was done and the readers were not informed about the difference between Moody’s Analytics and Moody’s Investor Services”. “Opinion of a Junior Associate Economist employed with Moody’s Analytics has been splashed all across implying it as the opinion of Moody’s Analytics.”

On its website, Moody’s Analytics describes itself as the economic research and analysis division of Moody’s Corporation. It states that its commentary is independent and does not reflect the opinions of Moody’s Investors Services, the credit rating agency that is also a subsidiary of Moody’s Corporation. While Moody’s Analytics has no business or revenue model in India, the other arm of Moody’s Corporation — Moody’s Investor Service — rates the government sovereign bonds and also the offshore debt instruments issued by Indian corporates, for which it derives revenue from the rated entities.

The latest Moody’s Analytics report noted that the government has failed to deliver on the promised reforms and also raised questions over its ability to deliver on them going forward. In its previous quarterly commentary in July, it had red-flagged “falling investments” and the “lack of progress on reforms” as key bottlenecks for India’s growth prospects. “The government’s failure to deliver promised reforms is the major impediment,” Moody’s Analytics said in its July report, “India Outlook: Waiting for Reforms to Fuel Growth”.

Incidentally, on August 17, while addressing the Indian community in Dubai, the Prime Minister had said, “Over the last few days, whether its IMF, World Bank or Moody’s, all the leading economic rating institutions have echoed in one voice that among the large countries in the world, the country that is fastest both in economic recovery and growth, is India.” He was referring to a move by the Moody’s Investor Services on April 9 that changed India’s rating outlook to ‘positive’ from ‘stable’.