S-P India analysis not objective: Ashwani Kumar
Washington: Blasting Standard and Poor`s (S&P) for threatening to downgrade India`s credit rating to below-investment grade, Minister of State for Planning Ashwani Kumar has said the global rating agency is not objective in its analysis and not fair to the country.
Given India`s strong economic fundamentals, it "raises serious doubts on the objectivity" of S&P ratings, said Kumar, who is visiting the US as part of the Indian delegation for the US-India Strategic Dialogue. "I personally think that an S&P rating is not being fair to India," Kumar said.
"I am appalled by the findings of Standard and Poor`s and am certainly disappointed that S&P has chosen to club India with some of the countries with which there can be no reasonable comparisons," he said.
India is a USD 1 trillion economy, widely expected by independent experts to have the potential to become the third largest economy surpassing Japan by 2030, he said.
Ashwani said India has grown in the last several years at around 8 per cent and even in difficult circumstances, as per the IMF report it is likely to grow at 7 per cent this year.
On Monday, S&P cited economic slowdown and political roadblocks to policy-making to warn that India could be the first BRIC (Brazil, Russia, India, China) nation to lose investment-grade rating.
Kumar cited macro-economic fundamentals – high domestic savings rates, high investment rates, demographic dividends and a burgeoning middle class with high purchasing power — as positives that India has, saying that investors would not find S&P assessment reasonable.
"…with various flagship programmes of the government, empowering poorest of the poor, economically and educationally and with our commitment to skill up 500 million people by 2020 there is no way that investors would find the S&P projected ratings as reasonable," he added.
Kumar said the government has already stated that S&P has not disclosed fully the basis of its assessment. The minister said, "We wanted to be heard, we have gone on record to say that on an overall basis, we hope to be able to achieve on average close to eight per cent growth in GDP terms between 2012 and 2017 the Five Year Plan period."
"The largest number of people anywhere in the world in the productive age group is in India. We have a robust financial system in place and 22 per cent of our GDP is accounted for by services and exports, which means that we are integrated into the global economy," Kumar said.
He also cited strong institutions of liberal democracy, rule of law and a transparent and independent system of conflict resolution as India`s strengths. "So all of these factors taken together raise serious doubts on the objectivity of the S&P ratings," Kumar said.
Later, addressing the US India Business Council, the minister said while India would not remain totally insulated from the global economic slowdown, the fundamentals of Indian economy remained sound. The economy will continue to expand, propelled by a large urban and growing middle class, he said, adding that by 2020 India`s landscape will undergo a vast transformation.
The large Indian middle class will have strong purchasing power, and almost 70 per cent of India`s GDP will be contributed to by urban India and about 40 per cent of India`s population will live in cities, he said.
Kumar expressed confidence that India would grow at 7 per cent in the current fiscal and, if the international economic situation does not deteriorate, then an average growth rate of 8.5 per cent was possible in the next five years.