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Govt wants upgradation of sovereign ratings

TIMES NEWS NETWORK 15.11.11

New Delhi: The government on Monday strongly pitched for upgrading its sovereign credit ratings by international agencies, listing reforms it had recently initiated and the resilience of its economy as against many recession hit western nations. 
    Contrary to the perception drawn that there is a policy paralysis in the government, the finance ministry in its argument listed more than twodozen bold policy reforms initiated recently — including fuel hikes, decontrol of petrol prices, committee of secretaries clearing 51% FDI in multibrand retail, 10% hike in urea prices, draft Land Acquisition Bill, New Takeover Code, draft telecom policy allowing spectrum tendering among others. 
    A high-level finance ministry team comprising chief economic adviser Kaushik Basu and department of economic affairs secretary R Gopalan made a power point presentation before a team of Moody’s — the international credit rating agency which had last week cut India’s outlook for its banking system from “stable” to “negative”. 
    Moody’s currently assigned Baa3 rating for government’s bond ratings for foreign currency debt, which is lowest investment grade rating. This review by Moody’s was done in 2004 and since then it has not upgraded the ratings. 
    Arguing that India’s credit strengths are much better than most BAA rated countries, the high-level finance ministry team said the key credit strengths is depicted in Indian economy showing continued growth, resilience in the face of global economic crises, and a commitment to reforms during the last seven years that should be factored in calculations.

Govt roots for better rating

OUR SPECIAL CORRESPONDENT 15.11.11

New Delhi, Nov. 14: The government today told Moody’s that India’s sovereign rating should move up in the Baa scale as the country’s credit strength is better than most Baa-rated nations. Moody’s currently rates the government’s foreign currency bonds at Baa3 with a stable outlook and the domestic currency debt at Ba1 with a positive outlook. A note prepared by the finance ministry for a meeting with Moody’s officials highlighted that India had taken “bold fuel hikes, especially in kerosene and diesel, decontrolled petrol prices, besides getting its committee of secretaries to clear 51 per cent FDI in multi-brand retail”. Moody’s officials were in the capital to hold a meeting with the representatives of the finance ministry before evaluating Indian government bonds. Last week, the credit rating agency had downgraded Indian banks amidst a flurry of protests. The banks have sought a review, contending that their intrinsic strength was far higher than the banks in the West. Finance ministry officials said they too were “encouraging Moody’s to revisit its rating for Indian banks”. Top finance ministry officials said, “We pointed out to them that the latest global competitiveness report for 2011-12 issued by the World Economic Forum indicated that India’s sovereign credit rating is at par with Baa1 category nations, two notches above the current ratios by Moody’s. We are encouraging them to reassess us and take a fresh look at our long-term credit strengths and take a long overdue credit rating upgrade.”