India's Credit Rating is almost Junk!

[balai_c]

The only way to decrease fiscal deficit is to tone down on the populist government scheme, like RTE, NREGA, etc. It is not the governments' duty to dictate how people should live their lives. The last time they tried this, the gold control system facilitated the emergence of characters like Haji mastan,and the thriving underground smuggling network. People will buy gold whether the Government likes it or not. Our purchase of gold will help us in the future. We can assist in reducing the import bill by (1) Trading in Rupees ,like we are doing with the Iranians ,and (2) Exploration of new oil and natural gas fields within India.

 

[panduranghari]

The only way to decrease fiscal deficit is to tone down on the populist government scheme, like RTE, NREGA, etc. It is not the governments' duty to dictate how people should live their lives. The last time they tried this, the gold control system facilitated the emergence of characters like Haji mastan,and the thriving underground smuggling network. People will buy gold whether the Government likes it or not. Our purchase of gold will help us in the future. We can assist in reducing the import bill by (1) Trading in Rupees ,like we are doing with the Iranians ,and (2) Exploration of new oil and natural gas fields within India.

I hear what you are saying. The way I see it, we are coming to the end of 1 monetary experiment and the beginning of another. In 1930, the gold standard was partially devalued. 41 years after that in 1971 the gold standard was dissolved. 40 years ahead its 2012, we will be seeing another new experiment. US dollar has no where to go but down.

The socialist policies implemented due to fractional reserve banking will have no place in the newer monetary experiment.

I think you are asking what the new monetary experiment might be?

 

[balai_c]

My understanding of economics is very limited. All I know is that India long before the British rule was an extremely rich and prosperous country. It was so in-spite of having no formal economists ,or extensive community of experts. We had coins backed up by Gold reserve, and no central committee overseeing our development.
All I can say is that economic progress is a highly complex beast,something even the best equations cannot predict. The best thing GOI can do, is set some basic rules,look after governance, and get out of the way. Indian people will take care of the rest.India did not remain one of the two top economic powers of the world for a thousand years for no reasons,you know!

 

[pmaitra]

Excellent post Pandu!

Now, since I know not much on this, do you think these credit rating agencies take inflation or devaluation of currency into account. From what I surmise, not many people these days stick to the gold standard.

 

[LETHALFORCE]

India's credit rating is junk for a few reason -it makes borrowing costs higher and
it discourages foreign investment. With higher borrowing costs the agenda is to
prevent Indians probably from taking over western companies. Foreign investment
does not matter Indian govt said they don't need any more investment coming in.
This is good in many ways in preventing a bubble like China has.

 

[Iamanidiot]

India's credit rating is junk for a few reason -it makes borrowing costs higher and
it discourages foreign investment. With higher borrowing costs the agenda is to
prevent Indians probably from taking over western companies. Foreign investment
does not matter Indian govt said they don't need any more investment coming in.
This is good in many ways in preventing a bubble like China has.

Keeping the conspiracies aside.The Economy is in very high slowdown

 

[LETHALFORCE]

Keeping the conspiracies aside.The Economy is in very high slowdown

It's not conspiracy but Western rating agencies are a non factor because
most indian investment does not come from Western nations. India may have fallen out
of favor now to other places like indonesia,malaysia,vietnam.

 

[ice berg]

Most FDI are from US, UK, Germany and Japan. So much for your theory of they dont come from Wstern nations.

 

[no smoking]

Who cares. Some countries with best rating are borrowing most money from those with less favorable ratings. If you use cash all the time, why do you concern what bank has to say?

Those bankers care. These ratings would affect the interest rate when your banker or business owners decides to borrow money from foreign banks.

It also matters to those foreign investors in your share market. To China, it is not a big deal as foreign funds play a insignificant role in our financial market. But to india, it is opposite.

 

[LETHALFORCE]

Most FDI are from US, UK, Germany and Japan. So much for your theory of they dont come from Wstern nations.

In India most of the FDI comes from NRI's,Middle East And Japan this is the real
Picture for the top 3. Many western institutions have been reducing FDI since
Last S and p and,moody's downgrades.

 

[LETHALFORCE]

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.

These rating agencies had all sub prime mortgage backed securitiies
rated at AAA Their highest rating. Well after Lehman, bear Stearns went bankrupt and all the
Banks in America had to be bailed out with TARP money and USA went into debt
Of trillions of dollars and a depression with unemployment in reality at 20 percent and
A worldwide depression and collapse of a few European economies.The ratings agencies
were reviewed but still did not admit they were wrong for their AAA ratings of assets
That. are worth 2 cents on the dollar today.