Finance minister Pranab Mukherjee has “rejected” a report by rating agency Standard and Poor’s (S&P) that said India risked losing its investment-grade rating. Mukherjee said the report was not based on a fresh rating action and that since April there had been no significant events to indicate that the economy’s vulnerability to shocks had increased.
Investors’ evaluation of an economy is continuous and does not occur only at instants when rating actions take place. Reports, such as the one S&P issued on Monday, are part of this process. The view of a rating agency and a sovereign authority are bound to be different.
Instead of saying the report was inaccurate or was not adequate, it is best if this government introspects on the reasons why such pessimistic reports are being issued in the first place. Indians know the answer; it is time their government figured it out.