The report cites ‘political indecision,slow implementation and introduction of Economic Reform‘ as the cause for S&P’s decision to downgrade Indian Economy.
Look at S& P’s Rating.
Germany AAA 78.9
UK AAA 88.4
US AA+ 106.6
Japan AA- 235.8
China AA – 22
India BBB 67.6
What do the letter ratings mean?
The general meaning of our credit rating opinions is summarized below.
‘AAA’—Extremely strong capacity to meet financial commitments. Highest Rating.
‘AA’—Very strong capacity to meet financial commitments.
‘A’—Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances.
‘BBB’—Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.
‘BBB-‘—Considered lowest investment grade by market participants.
‘BB+’—Considered highest speculative grade by market participants.
‘BB’—Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.
‘B’—More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.
‘CCC’—Currently vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments.
‘CC’—Currently highly vulnerable.
‘C’—Currently highly vulnerable obligations and other defined circumstances.
‘D’—Payment default on financial commitments.
Note: Ratings from ‘AA’ to ‘CCC’ may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.
“Although finance minister Pranab Mukherjeehas put up a brave face on the economy, evidence that it is on the skids can`t be glossed over any more. The industrial growth rate was a mere 0.1% in April, after falling to -3.2% in March. The fall in overall GDP growth has begun showing up in shrinking employment numbers, with jobs in labour-intensive industries such as textiles being hit particularly badly. Like the threatened downgrade of India`s investment rating by global agency Standard & Poor`s, the finance minister`s reassurances too could acquire junk status unless backed by vigorous government action.
The outlook on India`s sovereign ratings had already been revised down to the last notch of the investment grade last April. A further fall to speculative grade will not only significantly impact foreign investment inflows but also push up cost of borrowings from abroad, denting income and employment growth. The slowdown in growth and higher government spending has already eroded the targets for improvements in government finances and dampened investment flows. To reverse this trend, the government must end the policy paralysis which prevents it from implementing decisions in a wide range of areas, including multi-brand retail, pension, insurance, land acquisition, project clearances, railway fares, oil pricing, fertiliser subsidies and the goods and services tax.”
Countries with Higher Debt % to GDP are given better Rating,USA,Germany UK and Canada and Japan.
Does it mean you increase your Debt to be rated as Stable?
The rumbles on rating usually starts when US/Europe faces Monetary crisis.
Is it to enable them to stabilize themselves at the cost of others?
How is it that limping economies can help improve a better performing Economy?
I know the reply will be in jargons, which does not make common sense.
How has the increase in FDI in Insurance benefitted India?
Policy Decisions to help multi-brand retail, pension, insurance, land acquisition, project clearances, railway fares, oil pricing, fertiliser subsidies and the goods and services tax are needed?
To allow multi Brand Retail Chains,allow people.under the guise of Corporates to grab agricultural lands, increase Rail Fare, Goods and Service Tax?
How are these Companies performing in relation to improving Indian Economy?
Even to-day LIC is performing better.
Handing over infrastructural projects to foreign business may help them make more money.
Why not pump India money for these projects?
Yes policy indecisions are there.
They are to be corrected,not necessarily the one relating to FDI alone.
Look at Argentina,Brazil,Ireland, Greece and now Spain who followed IMF prescriptions till the other day!