The game of upgrading India’s sovereign bond rating from Moody rating agency: from Baa3 to Baa2
It is interesting how the top brasses in the RSS/BJP Governments, the bureaucrats and the politicians, have been pursuing various rating agencies to improve India’s ratings in various sectors. The fascination with improving ratings than actually performing better in the economy is laughable. The sovereign bond rating first achieved its highest A2 in the year 1988 under the Rajiv Gandhi Government and since then India has been hovering around B and two small a’s and from number 1 to 3. (Baa1, Baa2, Baa3 has been the hovering rating of India). By the way, the USA whose economy is shaky is having the highest ranking of Aaa. This will explain the picture of the rating of Moody.
Measurement is the biggest problem in the social sciences and in economics, it has become one of the often debated themes. Like in physics and mathematics, some of the quantities are measurable, but when it comes to human sciences, measurement becomes difficult and impossible and it becomes a political matter. When the politics get into the measurement, it changes the “quantity” or “quality” that is being measured: the famous application of Heisenberg’s uncertainty principle is at play. If you are aiming to measure something, you will not be able to measure other things with precision. Do be it and let us come to our discussion on “ratings” mania of the RSS/BJP Government.
The ease of doing business rating was linked with only the big cities like Mumbai and Delhi and it does not convey the overall “ease” of doing business in India. We have to ask only the small traders, small and medium scale businesses, and small capitalists about the status of ease of doing business in India at this moment. Look at how demonetisation (note bandi) affected the small businesses and completely broke the back of many businesses that thrived on cash. Look at how GST has been affecting the businesses in India, that the RSS/BJP Government needed to completely revamp it within four months.
Similarly, the sovereign bond rating has much to much of the public money that the RSS/BJP Government has poured into the banking system. The whopping 2 lakh crores of public money are now available to “restructure” debts of the “private” sector. This is interesting from many points of views. The people of India do not realise that when the money goes from the treasury of the Government to the private hands, it is their money and sooner or later they will feel the heat of it. When the Government is saying that it will infuse the banks with public money, the public debt will rise, the debt that only is recovered from the public at large. It is like punishing the middle classes, the poor, and deprived of the sins of the rich businessmen.
The RSS/BJP Government is excessively focused on improving ratings when it should be focusing on glaring social problems. The divisions growing in the society and the discontent in the country are not going to make the economy robust. Only a strong development if the human resource will help the economy in the long run. The reforms (if they are real reforms) are to succeed, the only way ahead for the country is to fight the deepening inequalities in the name of caste and class.
Author – Mangesh Dahiwale