New Delhi: The finance ministry has raised strong objection to the Moody’s statements about India’s rating a day before a scheduled meeting with government officials.
Moody’s had indicated on Tuesday it is unlikely to upgrade India’s sovereign credit rating anytime soon.
It said the credit implications of reform measures such as the goods and services tax (GST) and a bankruptcy law will only become apparent in the medium term while weak private investments, slower fiscal consolidation and a high-level of bad loans in the banking sector constrain India’s sovereign rating.
Moody’s currently has assigned the lowest investment grade (Baa3) for India with a positive outlook.
“The due process has to be followed and you cannot jump the gun, if you are reaching a conclusion before interaction with the finance ministry and the other ministries, then somewhere we see the entire rating process, the methodology, was deficient and that is something we pointed out. So we expressed our serious concern about the methodology they were following,” economic affairs secretary Shaktikanta Das said on Thursday, speaking at the sidelines of a Brics infrastructure financing Conference.
Das said government’s concern was only about the methodology and the process. “We would expect the interaction with the government and the finance ministry to take place, and then of course, they are a rating agency and they are free to arrive at their own conclusion,” he added.
On Moody’s statement regarding waiting for reforms to take roots, Das said the depth of reforms in India cannot be doubted, and it’s a unidirectional process. “In the last several years, especially during the last two years, the no of reforms, the kind of reforms, the pace at which the reforms are being undertaken by the government, due weightage has to be given to that. You cannot say that I will give zero weightage and I will wait till infinity to see that these reforms take roots,” he added.