oppn parties Downgrading By Moody's: Somewhat Pessimistic

News Snippets

  • Special DG (Training) in CRPF, S N Shrivastava, appointed special commissioner (law & order) in Delhi Police in order to quell the violence. He is also expected to take over as chief of Delhi police once Amulya Patnaik's term ends on February 29
  • Curfew and shoot at sight orders reportedly in force in some areas, but Delhi Police HQ does not issue a notice for the same
  • The Central government has pressed paramilitary forces to control the riots in Delhi
  • Mobs in Delhi target journalists, check them for religious identity and snatch equipment
  • 13 people deal until now in one of the worst spells of violence in Delhi
  • Violence in Delhi shows no signs of abating with fresh areas in the north-eastern part of the capital coming under its grip
  • Delhi High Court says DGCA was wrong in approving the flying ban on stand-up comic Kunal Kamra by airlines other than Indigo for his alleged misbehavior with TV anchor Arnab Goswami aboard an Indigo flight
  • The Bihar assembly passes a resolution to stick to the old NPR form, making it the first NDA state to do so
  • Arms deal for advanced helicopters, worth $3bn, signed with the US, but the trade deal remains elusive
  • Trump says he has a good equation with Pak PM Imran Khan and assures India that Pakistan is working to reduce cross border terrorism
  • Trump once again offers to mediate in the Kashmir issue
  • Trump says it is up to India to decide on the CAA
  • US President Donald Trump says PM Modi wants religious freedom for all
  • US President Donald Trump lands in Ahmedabad, received at the airport by Prime Minister Modi
  • US President Donald Trump to land in India today
Continuing violence in Delhi takes the sheen off the visit by US President Donald Trump
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.