India's Credit Rating is almost Junk!

India is paying dearly for the Central Government's dithering on crucial economic reforms and general lack of governance. The lack of any interest in the UPA to push for measures that can contribute to enhanced economic growth, is a matter of serious concern.

Rather than work toward improving economic and social welfare, the UPA (read Congress) is busy firefighting a series of scams: 2G, CWG, Abhishek Manu Singhvi, and Bofors. It is only expected that when it comes to survival, the UPA will only be bothered about protecting its turf and political votebank.

Yesterday, Standard and Poor's (S&P), a leading credit agency, lowered India's rating outlook to negative and warned of a downgrade in two years if there is no improvement in the fiscal situation and the political climate continues to worsen.


The lowering of outlook from Stable (BBB+) to Negative (BBB-) is expected to make external commercial borrowings expensive for Indian corporates. It may also have implications for the capital market.

BBB- is the lowest investment grade rating, just above Junk status.

S&P said that, "the outlook revision reflects our view of at least a one-in-three likelihood of a downgrade if the external position continues to deteriorate, growth prospects diminish or progress on fiscal reforms remains slow in a weakened political setting".

Further, it said that the negative outlook signals likelihood of the downgrade of India's sovereign within the next 24 months, especially "if its external position deteriorates, its political climate worsens, or fiscal reforms slow".



What is Credit Rating? Any form of debt (i.e. money borrowed) has to be repaid. So before you lend money, you would like to perform a background check on the borrower’s repayment capacity, i.e. ability and willingness to repay the debt. In other words, this background check is used to test the creditworthiness of the borrower.

Based on the result of the background check, a credit rating is used to assess the creditworthiness of a borrower or issuer of debt. This kind of credit rating is assigned by a credit rating agency.

To understand what credit rating is all about (and what this kind of a revision means), read The Explainer: Credit Rating, which first appeared on this blog on August 5 last year.







BJ's nocabbages: India's Credit Rating is almost Junk!

now the credit rating agencies are using outright blackmail to force 'reforms'

here's moody doing the same

UPA Government a drag on economy, says Moody's

Well inspite of the AAA rating enjoyed by Great Britain, its in recession and no one is willing to invest there. India is doing well. These credit ratings are useless. Didn't these agencies give Lehman brothers securities AAA rating? Says it all.

Comedians! Both GOI and rating agencies.

Is it possible this rating was also determined by India's inability to pay off massive bills from Iran for the oil purchase? I doubt it, but this is an excellent proof of India's current economic woes.

Credit rating is very important. Considering GoI is pushing away FDI to control the Rupee, it won't matter much the way it is going.

The financial crisis in the US can in fact be DIRECTLY linked to these credit rating agencies - giving risky deals AAA ratings (i.e. same level of security as govt bonds).

All the credit rating agencies and all the big banks and financial conglomerates (city group) were all working together.

now west has found another tactics to blackmail Indian government to open up FDI in retails. why do we even care what western ratings agency



this poster clearly says, what they want... this rating system is nothing but blackmail

it says "ease restrictions on foreign ownership of various sectors such as banking, insurance, retail(FDI).."

we should not give shit to such ratings system owned by americans..

India is doing just fine..

Its not. We have to move out of the debt growth paradigm.



Please see the 8 part video linked above.

The mathematical limit for debt has been reached and now we are going to see the drop.

Perhaps ironically, S and P's previous CEO was Indian (Deven Sharmam left in 2011).

Even citigroup's CEO is Indian in fact - Vikram Pandit.

Left or forced out? He downgraded American debt from AAA to AA.

Today these agencies are useless simply because they are painting a bleak picture of the Indian economy。

Tomorrow the same agencies are THE source of truth and certainty because they are trumpeting the cause of a “shining” India。

In search of an S&P upgrade, India got a shock

By Manoj Kumar

NEW DELHI | Fri Apr 27, 2012 12:53am IST

NEW DELHI (Reuters) - S&P credit analyst Takahira Ogawa listened politely as officials at India's finance ministry made an hour-long pitch for a ratings upgrade, citing economic growth prospects, revenues and their efforts to contain the government's fiscal deficit.

At the meeting two weeks ago, officials argued that tax returns were rising and debt levels were on the decline compared to gross domestic product, two officials who were at the meeting told Reuters.

Singapore-based Ogawa gave no sign of what he was thinking - and could not immediately be reached for his version of events - but evidently he left unconvinced.

On Wednesday, the ratings agency cut its outlook on India's BBB- rating to negative from stable and warned it had a one-in-three chance of losing investment-grade status, sending shockwaves through the ministry. Its decision could raise costs for Indian borrowers and undermine foreign investor confidence in Asia's third-largest economy.

"We were not expecting this downgrade," one senior adviser at the ministry said.

The misplaced optimism before the cut suggest the finance ministry may be out of touch with opinion among private economists, investors and even the central bank about the faltering economy. But it also reflects the view in New Delhi that India is unfairly saddled with a low sovereign rating.

In search of an S&P upgrade, India got a shock | Reuters

I second that part in blue above.

Standard and Poor's recommendations:

• Reduce fuel and fertilizer subsidies - I agree.
• Introduce a nationwide goods and services tax - No incumbent will do that, and moreover, if we are withdrawing subsidies, there is no justification to introduce more taxes; rather, some existing taxes and duties should be eased or discontinued.
• Ease restriction in foreign ownership of various sectors such as banking, insurance, and retail - In other words, open up and make yourself vulnerable or we will give you bad rating.

I say S&P, go and troll elsewhere. We couldn't give, even if we tried, a tuppence about such imbecilic recommendations!

In addition to what I said above, I also think India needs to pay off its debts. We need to make this 'credit rating' thing irrelevant. Why on earth should we have to borrow money anyway? Aaah, I see it. Those bugger are sitting in the government, borrowing money, and stashing them in the Swiss Banks.

as long as we are not defaulting on our debts it is good, people know that Indian Eco is based on strong fundamental and our system is transprant, unlike others.