Moody's rejects ratings upgrade lobby by Modi

• India's current rating by Moody's stands at Baa3, the lowest investment grade, a notch above junk status.
• US-based agency, Moody's, declined to budge citing concerns over the country's debt levels and fragile banks.
• Winning a better credit rating on India's sovereign debt would have been a much-needed endorsement of Prime Minister Narendra Modi's economic stewardship, helping to attract foreign investment and accelerate growth.
• Moody's said India's debt situation was not as rosy as the government maintained and its banks were a cause for concern.
• India has been the world's fastest growing major economy over the past two years, but that rapid expansion has done little to broaden the government's revenue base.
• At nearly 21% of gross domestic product (GDP), India's revenues are lower than the 27.1% median for Baa-rated countries. India is rated at Baa3 by Moody's, the agency's lowest notch for debt considered investment grade. A higher rating would signify to bond investors that India was more creditworthy and help to lower its borrowing costs.
• India's debt-to-GDP ratio has dropped to 66.7% from 79.5% in 2004-05, interest payments absorb more than a fifth of government revenues.
• The ministry attempting to impress that the government's resolve to contain the fiscal deficit at 3.5 per cent of GDP in the current financial year didn't impress the agency.
• Diron had told local media that a ratings upgrade for India was some years away, depending on the progress on reforms.
• Diron said that, not only was India's debt burden high relative to other countries with the same credit rating, but its debt affordability was also low. She added that a resolution to the banking sector's bad loan problems was "unlikely" in the near-term.
• Moody's on November 16 affirmed its Baa3 issuer rating for India, while maintaining a positive outlook, saying the government's efforts had not yet achieved conditions that would support an upgrade.

My View:

Trying to influence for better ratings, whether deserving or not, is not uncommon but definitely is beneficial to the nation. Attempting to influence rating agencies without taking any pragmatic corrective steps and getting deeply involved in petty politics is unbecoming of leader of the nation. Ask a farmer and he will tell you, fields tilling, irrigating, seeding, cultivating, applying fertilizers and harvesting in a sequential manner over a certain time only will result in good harvest. Nothing can be achieved overnight. In a country with 125 crore people, diverse cultures and saddled with illiteracy, poverty, belief systems and spread over 600,000 villages development is a slow process. In the process inflicting injuries on the lowest strata is immoral and must be avoided. Above all principles of democracy and constitutional obligations should never be given go by.