oppn parties Downgrading By Moody's: Somewhat Pessimistic

News Snippets

  • Supreme Court approves two-child norm for government jobs in Rajasthan
  • DMK issues rocket ad with Chinese flag, PM Modi slams party
  • BJP alleges that Congress workers raised slogans like 'Pakistan jindabad' outside Karnataka assembly after the results for the RS polls were declared. CM Siddaramaiah promises stern action if claim found true
  • Calcutta HC says any agency can arrest absconding Sandeshkhali TMC strongman Sk Shahjahan
  • Himachal Pradesh Speaker suspends 15 BJP MLAs for unruly behaviour
  • Joint teams of Navy, NCB and Gujarat ATS seized a boat with 3200kgs of narcotics in high seas off Gujarat coast. Five crew members were also arrested
  • Centre tells Supreme Court that economic disaster will follow if states are allowed to tax mineral land
  • NCLT asks Byju's to keep rights issue funds in a different account
  • Sunil Bharti Mittal of Bharti Enterprises was conferred the honorary Knighthood by Britain's King Charles III for services rendered in furthering business relations between the UK & India
  • RIL to merge Viacom18 with Disney's Star in $8.5bn deal, Nita Ambani to lead the board of merged entity
  • Vodafone Idea shares fall nearly 15% over fears of huge fund raising
  • Stock markets crash on Wednesday: Sensex loses 790 points to 72304 and Nifty 247 points to 21951
  • BCCI gets tough, removes Shreyas Iyer and Ishan Kishan from central contracts for missing Ranji Trophy. In a first, it starts fast bowling contracts to reward emerging players like Akash Deep and four others
  • Tennis: Sumit Nagal loses in first round of Dubai Duty Free tournament
  • WPL: UP Warriorz beat Mumbai Indians by 7 wickets
Bengal police arrests TMC leader Sk Shahjahan, the prime accused in the Sandeshkhali disturbances
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.