Govt,industry slams S&P on ‘angel’ byte

Secretary in Department of Economic Affairs R Gopalan said the government is not getting “transparent answers” from S&P on matters related to ratings.

Industry body Assocham’s President Rajkumar Dhoot,who is also an MP,said that the S&P’s comments on political and government leadership were “no more than drawing room talk and that too in a loose fit”.

Citing division of roles between UPA chairperson Sonia Gandhi and Prime Minister Manmohan Singh,Standard and Poor’s had yesterday threatened to downgrade India’s credit rating. It said India could be the first BRIC nation to falter and fall below investment grade in the ratings.

“How can they pass reflection on political party and political leadership?” Moily asked. The Minister further said that he did not think any credit rating agency in the world had an approach of this type which “smacks” of politics.

S&P should realise its mistake and rectify it,he added.

“You cannot judge us on a few parameters. We think we are in a much better condition than they think we can be,” Gopalan said.

Moily also wondered how can a credit rating agency qualify the Prime Minister as unelected leader. “Prime minister is an elected member of the Rajya Sabha and has the full support of about 350 members,allies and supporting parties. I do not think this kind of support was available for any Prime Minister,” he said.

Mukherjee had yesterday rejected S&P’s contention and said the economy will turn around this fiscal.

Noting that S&P should should go by economic criteria,Moily said,”S&P cannot speak like this. The Congress and government have been working in harmony. Since 2004,they have been working very well,” he said,adding that there were differences between political parties and the government during the BJP-led NDA reign.

The UPA-II government is fully supported by the Congress,he said. The Minister pointed out that the party President (Sonia Gandhi) chose to sit back and gave the Prime Ministership to Singh when she herself could have occupied the top post thrice.

Singh is “a great economist and statesman” and since 2009 he has been leading the government very well,he said.

The Minister further noted that fundamentals are strong and India’s FDI is better than China and the country has a strong economy and strong government.

According to Gopalan,the Finance Ministry had told S&P representatives that their process of rating was “not transparent”.

“We had also asked them to share with us their findings before the ratings are assigned so that we can explain our point of view. We don’t seem to be getting transparent answers,” he said.

Earlier in April,S&P had cut its outlook on the country’s sovereign rating of ‘BBB-‘ to negative from stable.

After meeting the Prime Minister,Dhoot said,”Let us not get rattled by these rating outlook and the threats. The Indian economy has an inherent strength and we never had any record of default in any of our international obligations”.

Dhoot said the Standard and Poor’s own track record is also not flawless. “It gave excellent ratings to Lehman Brothers last year and what happened in three months time Lehman Brothers disappeared. On August 11,2011,S&P downgraded American economy. What happened? In a quarter,American GDP growth reached 3 per cent from 1.8 per cent.”

He said let India and other emerging countries not become “whipping boys” for these global agencies. They do more harm than good to us in terms of building a worldwide negative perception,he added.

S&P rating: BJP says wake-up call,Cong says not gospel truth

BJP today termed the downgrade warning to India by ratings agency Standard and Poor’s as a “wake-up call” and charged the government’s “policy paralysis” was responsible for it while Congress dismissively said it was not a “gospel truth” about the state of the economy.

BJP said the UPA government “is still in denial mode about the economic crisis” despite the warning from the global ratings agency and claimed this was a result of the “governance deficit and differences within the government”.

“Standard and Poor’s downgrade warning is a wakeup call for India… Instead of amending and carrying out mid-course correction,the UPA government is as usual in denial mode. The denial won’t work as international investors accord much credence to the ratings by the ratings agency,” BJP spokesperson Prakash Javadekar said.

The ratings agency had warned India may lose its “investment grade” and may become the first “fallen angel” among BRICS nations.

“BJP has consistently pointed out that governance deficit in UPA government is causing an irreparable loss to the country. There are differences within Congress,within the cabinet,between the coalition partners and between 10,Janpath (Congress President’s residence) and 7,RCR (PM’s residence),” Javadekar said.

He charged this has resulted in a “complete policy paralysis evident in every field of decision-making”.

However,Congress dismissed the S&P report,saying it was “not gospel truth”.

“Standard and Poor’s report is only a ratings agency report and not the gospel truth nor a casting stone,” party spokesperson Manish Tewari said.

The S & P report says there are roadblocks for reforms in India on account of division of roles between party President Sonia Gandhi and ‘unelected’ PM Manmohan Singh.

“The report betrays very poor appreciation of India’s democratic system and government’s functioning. The same report points out higher growth for the country in 2007. Even in that period,Sonia Gandhi was UPA Chairperson and Manmohan Singh was Prime Minister. If at all there was a disconnect,why was it not affecting the growth rate then?” Tewari said.

Standard and Poor’s,which had lowered India’s rating outlook to ‘negative’ from ‘stable’ in April,said Congress is divided on economic policies and there is substantial opposition within the party to any serious liberalisation of the economy.

Tewari,however,dismissed the criticism saying some people are in the habit of raising ghosts and slaying them.

“To extrapolate that there is a disconnect is completely erroneous and betrays complete lack of awareness about India’s political system and governance. If there was such a disconnect,why the country’s economy grew so fast earlier?” Tewari said.

BJP targeted the government on the issue and insisted such downgrades will adversely impact the already deteriorating Indian economy and make international borrowing costly for Indian companies.

Javadekar also posed some questions to the government: “can the Finance Minister deny that growth has come down to 5.3 per cent and Index of Industrial production has fallen from 5.3 per cent to 0.1 per cent on a year-on-year basis?”