संसार की सर्वोत्तम हिंदी पत्रिका



  • The Mood Of The Indian Poor Remains Dark

    A more nuanced and stoic acknowledgement, rather than ecstatic celebrations, up and down the government and the party, of such global ratings would have freed PM Modi from being held hostage to the mood swings of foreign rating agencies

    Shining Brand Moodi In India




    Published On : Nov 26, 2017 12:00 AM | Updated On : Nov 26, 2017 12:00 AM

    Return of Lord Ram to Ayodhya might have elicited similar joyous celebrations, as did the upgrading of Moody's India's sovereign rating to BAA2

    Clearly, BJP is clutching at straws and gasping for scrapes of good news

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    The Mood Swings Of Moodi and Standard & Poor

    The Devil and Its Moodiness

    Now , there's a devil, and in details it is hiding. Take, for instance, Moody rating.

    Return of Lord Ram to Ayodhya might have elicited similar joyous celebration, as did the upgrading of Moody's India's sovereign rating to BAA2.

    The response from the masses in the dusty streets and bazaars all over India and classes could not have been more diverse.

    While the air-conditioned conference rooms, richly upholstered television stations studios and perfumed lobby's and aroma filled café's of plush five star-Hotels swept with elation and unbridled excitement, common people in the bazaars and in their homes simply let their lower jaw hang to say a collective "Duhh!!"

    That's India

    Now, that's India for you.

    Besides a riot of colors, sounds, music, celebration, and yes, some occasional actual riots here and there, there's a a wide spectrum of emotions to contend with.

    Underpinned "Expectation"

    Moody, as an organization, clearly was in no mood for categorical, no-nonsense endorsement of Indian economy. It "underpinned" it with an "expectation", now that's a noun that resonates with a billion Indians and counting.

    They live and motivate themselves with an "expectation" when each morning they tumble out of bed and venture forth to seek gainful employment, hunt for bargains amongst costly vegetables, imported lentils, and stand at busy gas stations refueling their vehicles, or plough their fields.

    Generations have sustained themselves on that one single noun, "expectation", that the next day will somehow be better than the one gone by.

    Expectation that for once, they would have voted in a government, that will actually build roads and affordable infrastructure in an organized planned fashion without increasing the tax burden.

    "India's high growth potential and its large and stable financing base for government debt"

    To quote Moody expectation further ".. that continued progress on economic and institutional reforms will, over time, enhance India's high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term."

    "while India's high debt burden remains a constraint on the country's credit profile" Moody took solace in the belief " that the reforms put in place have reduced the risk of a sharp increase in debt.. "

    Therein lies the Devil – Short Term No Change

    While Moody hoisted India on certain long term economic parameters such as foreign currency bond ceiling, foreign currency bank deposit ceiling, across it's Baa Baa ladder and no more keeping the short term parameters unchanged.

    This short term no confidence motion passed in keeping the ratings unchanged, even after 14 long years should give a pause to those uncorking the merry champagne.

    The "this far and no further" coyness reaffirms the economic turmoil that the citizens of India have been undergoing now for a long time, exacerbated by senseless Demonetization and mindless GST implementation.

    "..Baa Baa …Black Sheep And The Carrot

    However, there's a dangling carrot of another potential rate improvement.

    Modi government, under siege and reeling with major economic reverses being faced by Indian's due to its decisions know that a strategically timed rate increase would feed the ravenous appetite of 24x7 news channel and would effectively serve to divert the attention of the nation towards a rating that might come to the rescue during election time.

    With 2019 General elections breathing down its neck, surging global oil prices and hardly any time to introduce major reforms that would actually make lives simpler and food and housing affordable is now not even a mere flip of a coin.

    The Reforms- Theoretically and Realistically

    GST, one of the key parameter that Moody's agents filed under the legend of "reforms", thanks to its frequent rate changes and rethinks that has been now competing with the volatility of Sensex stock exchange has disrupted established trade and distribution channels across India.

    Moody too expects "Goods and Services Tax (GST) will", eventually, "promote productivity by removing barriers to interstate trade"

    One simply needs to walk down the street and have a casual conversation to realize first hand from traders, acorss India, on how it is actually destroying the productivity and proving to be a drain and a financial burden laced with unproductive resource, time and money.

    Aadhar-Biometric- Linkage - The Depth and Width Of Cyber security

    The Aadhaar biometric accounts linkage, perfect on the drawing board, suffer from appalling security breach.

    Many electronic interfaces linking the various governmental agencies are still running on older outdated version of software, they are invariably susceptible to ransom-ware and cyber attacks.

    That Indian central government, state and local level agencies providing public services will be able to iron clad financial and social data base against any future cyber attacks is an odd that none is willing to take.

    The monetary policy framework, another of key parameters that Moody is gung-ho about, suffers from haphazard policy implementation, driven by political exigencies rather than a meticulously planned fiscal restructuring.

    Measures to control the runaway non-performing loans (NPLs) in the banking system need a comprehensive approach than what has been dished out so far;

    The Informal Sector – The Firewall - The Final Frontier

    The informal sector is a beast that foreign powers are not able to control.

    It is the informal economy that insulates India from the global economic downturn, that is now so integrated to fail collectively and usher in a global meltdown.

    This is the final frontier, the firewall, that the multinationals strive to breach.

    This is where sizeable growth is hidden from their pie charts and growth graphs.

    India, with its social and cultural diversity and economic depth and submerged economy operates as a well oiled machine, beyond the strait laced rules and regulation that foreign powers would like India to perform on.

    India is not dependent on the ratings bestowed by agencies with little understanding of generation old submerged economy and its own ingenious method of market dynamics.

    Mood Swings and Joy Rides – Helping Brand Moody

    Modi government, in its desperation to clutch at any positive news went overboard and in turn did Moody's brand lot of shining.

    Who knew? Moody, for all Indians cared, was "Tim Moody" a retired cricketer.

    Modi government and every single minister, up and down the cabinet, every single organizational leader worth its salt, fell all over themselves promoting a foreign brand.

    Entire Modi government, clamoring wildly to promote Moody's rating across print and electronic media, accorded to it millions of dollars worth prime time free advertisement, paid for, ultimately by Indian tax payers no doubt, made Moody a household name, thereby saving Moodi lot of ad-spend in one of the largest global market.

    They just preached to the choir.

    Falling into the Ratings Trap

    A more nuanced acknowledgement of such global ratings would have freed PM Modi's government to the possibility of being a hostage to the mood swings of foreign rating agencies who now know the power they possibly wield and the jugular vein when the time, potentially election time, is right to wedge out a "reform" or two out of a political party struggling to retain power.

    Not The Poor

    Standard & Poor did not deem fit to make any change to their expectations, long term, medium term or short term.

    Nor do the poor in the busy streets of India feels so.

    So, by gently nudging a mere long term credit rating, who gained? Not The poor


    Debon Bhattacharji from N. Delhi, Aparajita Singh from Mumbai contributed

     

    write to editor@vpatrika.com


    vpatrika.com Staff

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