oppn parties Downgrading By Moody's: Somewhat Pessimistic

News Snippets

  • Citizenship Bill to be tabled in the Lok Sabha today. Heated debate likely
  • Domestic tourism in Kashmir slumps by 87% in August-November period
  • Prime Minister Modi says police must make women feel safe
  • West Indies beat India by 8 wickets in the second T20 at Thiruvananthpuram
  • Rahul Gandhi says the NDA government kept Chidambaram in jail for so many days in order to take revenge
  • Kohli reclaims the top spot in ICC rankings from Steve Smith
  • Cabinet clears the Citizenship Bill. It will be placed in the Lok Sabha in a day or two
  • Hindu Jagran Manch members clash with the police in Kolkata after being refused permission to take out a rally
  • West Bengal Governor Jagdeep Dhankar says important files were sent late to him and his delay in signing them draws criticism from the TMC. It also brings the state assembly to a halt
  • 92,000 BSNL & MTNL employees apply for early retirement taking advantage of the new government offer. It will result in an annual savings of Rs 8.700 cr for the merged entity
  • Dengue deaths multiply in Kolkata even as the CM, Mamata Banerjee, asks the opposition not to politicize the matter
  • Government orders inquiry into the breach of security at Priyanka Vadra's house
  • Chennai-based engineer Shanmuga Subramanian helps Nasa find the pieces of Vikram lander on the Moon's surface
  • New Maharashtra CM Uddhav Thackeray says his administration will take back cases against Dalits and activists in the Bhima Koregaon case
  • Dhawan calls his dismissal "nonsense"
43 killed in a fire at units in illegal building in heart of Delhi
oppn parties
Downgrading By Moody's: Somewhat Pessimistic

By A Special Correspondent

With the Indian economy showing signs of a prolonged slowdown and with the government responding extremely slowly and with small measures, one cannot fault Moody's for downgrading India's rating from "stable" to "negative". But having said this, the fundamentals of the economy are quite strong in the medium term and beyond and this rating will have to be revised soon. The present state of the Indian economy must also be seen in the context of the slowdown being seen in all major economies of the world.

The slowdown in India is driven by a near absence of demand. It is not as if people are not earning. But the gloomy outlook has made them wary about the future and they are postponing buying decisions. This situation is not going to change until the government invests heavily in infrastructure to put money in the market. The cascading effect will benefit all sectors, lifting the sentiment. But the government simply does not have the money. Hence, it should divest in state-owned enterprises like the loss-making Air India and others and think of other methods of raising revenues.

The government has been taking steps to improve the ease of doing business. It has lowered corporate taxes to make them competitive with other countries.  Inflation is low, fiscal deficit has been kept in check and the current account deficit is not showing an alarming rise. These are positive factors. It has also taken major steps to revive the real estate sector by floating a fund to complete incomplete projects.

But the government has the mandate to push for structural reforms. It has been acting too slowly, often giving the impression of carrying out knee-jerk responses to crisis situations. This has to change. It has to bring the banking sector back in line, fix realistic charges for utilities like power to make the sector get better realizations and become viable. It has to work to create a market for debt instruments in India. It has to further cut red tape and make doing business easier. Structural reforms are the need of the hour. The government must not delay taking decisions in this regard.