Recently UN revised India’s 2024 growth projections upwards to 6.9% from 6.2%. It is just a statement of facts. United nation has no role in achieving it. These reports are being published as India is moving in the direction of becoming a super power firmly, not the other way round. India has toiled for it and thrived in the face of adversity after adversity. First came the COVID endemic where we have to protect the 17.76 percent of the world population with a GDP contribution of mere 7.59 percent and a paltry per capita income. The long periods of lockdown and spread of endemic threatened the survival of Indian economy. As if this was not enough Ukraine Russia war gave another blow. The sanctions were imposed on doing business with Russia. This would have led to energy crisis as Iran the other source of our OIL supply was already facing sanctions. The road to becoming super power is built on the capacity that India developed to convert threats into challenges and challenges were turned around in opportunities.
Luckily India did its home work in advance. Linking of the subsidies to Aadhar led to the plugging of leakages. It clubbed with inclusion of the poor to the financial services, also provided the participation of public and agility in delivery. UPI, Rupay card, focus on infrastructure development, Improvement in ease of doing business, completing projects in time, did help the world to look at India as a destination for doing business.
The western media which never missed an opportunity to belittle India was full of praise. The economist published an article with the title,
“How did India beat covid-19?
The virus exhausted itself after tearing through the vast population” Oct 29th 2021|delhi
Before the world recognised India stood firm to manage the unprecedented challenge caused by COVID-19 infections despite poor health infrastructure and the unknown virus.
1. Both government and non-governmental support augmenting preventive and thera¬peutic health-care facilities, diag¬nostic and research facilities, and tracking services, to minimise the loss of human life.
2. India was among the first few countries which produced vaccine, it did not use this opportunity to exploit the world but distributed it to nations in need.
3. The learning of Adhar implementation project was exploited and the first CEO of UIDIA R.S. Sharma Chief Executive Officer of the National Health Authority. It implemented and monitored the vaccination drive of over two billion doses. Yesterday I have connected my vaccination certificate to my recently renewed passport flawlessly.
4. The management model adopted at the national and at the state level (including the largest state of Uttar Pradesh, with a population of 240 million), has been well lauded nationally and internationally during these trying times for planning and execution.
5. The second wave has caught the nation unaware with its rapidity and magnitude. Health services were at the brink of collapse. Despite these difficulties, the case fatality rate was never reached the level that observed in many developed countries with the financial luxury of complete lockdowns for months on end.
6. Stock market indices have been reaching new heights.
7. The government did not look at budget deficits. It went ahead with free vaccination. The building of central Vista, creation of infrastructure funded by government kept the wheel moving, free ration, financial help to farmers and poor kept the economy oiled.
India first, policy during international crisis.
In international arena India did not succumb to pressure. It purchased oil both from Iran and Russia. The external affair minister S. Jaishankar negotiated and explained the concerns of India western developed countries in such a way that India not only managed its oil requirements but exported the refined products.
It is worth mentioning that successful surgical strikes on anti-India forces in Myanmar and Pakistan occupied Kashmir was the first litmus test. The threat of atom bomb wielding terror exporting nation was exposed for good.
Drivers of Growth which will make India a super power.
There is a huge potential untapped. Both India and China were at par till 1990, India's per person income was $367, while China's was $317. We implemented reforms to open our markets and provided fuel to the growth engine of China. By 2000, India's per person income had risen to $1,357, compared to China's $4,450. China focussed on manufacturing and India focused on exporting raw material and importing finished goods. As a result, the trade deficit kept increasing. We have missed the bus then but it is high time we regain our old glory.
• encouraging investments and nurturing businesses.
• Skill India and National education policy to provide actionable research to industry.
• Digitisation, tapping the potential of artificial intelligence.
• Infrastructure development.
• Tourism: India has a treasure of world heritage, natural beauty which covers sea, forest, mountains, desert and many other breathtaking views, temple tourism has opened new vistas. Vishvanaath in Kashi, Mahakala in Ujjain and Ram Lalla in Ayodhya have drawn pilgrim from India and abroad. With improved facilities a fast growth can be achieved.
• Manufacturing and exports. Shift from raw material and labour-intensive products to processed high end products. Lithium-ion batteries, solar energy, wind turbine, mobile hand set, tele communication, aviation etc.
• Transforming from importer of advanced defence system, weapons, fighter jets to exporter of the same.
• Space research and other scientific equipment.
• From generic medicine to advance research facilities.
• From code writing to application-based products.
• State governments to emerge as a facilitator of private investment and growth. Fouse on northeast and laggard state will be the game changer.
• Implementing climate change and zero carbon emmision goals
• Vasudhaiv Kutumbakam: diversity and inclusion. Women to play a bigger role.
Why India must carefully consider the value and impact of international rating agencies.
International agencies are heavily funded by western countries, recently China has joined these in a big way. As a result, these agencies are not independent to assign rating in a free and fair manner.
“...the ratings agencies' problem was in being unable or uninterested in appreciating the distinction between risk and uncertainty.”
― Nate Silver
Therefore India, like any other nation, must carefully consider the value and impact of international rating agencies. Following are few important reasons, why India might not give them undue importance:
• Bias and External Influence: International rating agencies may not always provide an unbiased assessment of a country's economic situation. The methodologies chosen might not capture the nuances of a diverse democratic economy like India which has to balance regional, lingual, cultural and other factors. As already mentioned above, their inferences drawn could be influenced by geopolitical factors or the agendas of their stakeholders. We have seen such examples in 1966 when loan was attached with devaluation of rupee.
• Limited Understanding of Local Dynamics: Standardized metrics used by these agencies often rely on western experiences that may not fully account for the complexities of India's economic, social, and political landscape. As a result, their ratings may not accurately reflect the country's true economic health or potential. This can be seen at India Bangladesh border. Bangladeshi citizens try to sell their local products to Indians taking Indian rupee, a prudent nation will not allow use of Indian rupee to sell Bangladeshi goods. infiltration is one way, yet India is rated below Bangladesh, Pakistan and Sri Lanka on many counts. Noted economist Sanjeev Sanyal a member of the Prime Minister’s Economic Advisory Council, said in a podcast,
“If you went by objective criteria, India should be at least one, probably two ratings above where it is right now. He said that about 20% of the weightage, roughly speaking, of most sovereign ratings is based on subjective factors, and the rating agencies don't quite tell what they are. "But because I'm from that industry, I know roughly where they come from. So, what they do is they use various things like the World Bank's World Governance Indicator as a proxy for things like political stability, governance, and those kinds of fuzzy, subjective things."
• Impact of acting as a Sovereign nation: Adhering parameters set by international rating agencies could potentially undermine India's sovereignty by allowing external entities to exert undue influence on its economic policies. To get a better rating India should have cut expenditure to keep deficit in control but India opted to increase government spending to mitigate the impact of slow down due to COVID endemic. India must maintain control over its economic decisions rather than being overly swayed by external ratings.
Inconsistent Track Record: International rating agencies have faced criticism in the past for their failure to accurately predict or respond to economic crises. The subprime crisis was the fiasco which no agency could detect. Indian think tank should validate the reliability and predictive power of these agencies. It is better to prioritize its own economic analysis and policymaking. Covid and Ukraine war crisis has proved that the strategy adopted by Indian leadership against the advices of western think tank paid high dividends.
Focus on Long-Term Development: India has prioritized long-term economic development and social progress over short-term fluctuations in credit ratings. We are looking at 2047 and 2070 for economy and carbon emission respectively. If the nation fall prey to chasing favourable ratings, India may fail to focus on sustainable development strategies that benefit its citizens in the long run.
Development of Domestic Rating Agencies is the key to future
India has been working to develop its own domestic credit rating agencies to provide more tailored assessments of its economic performance. By nurturing these domestic agencies, India can control the narrative surrounding its economic outlook much better and reduce its reliance on international ratings.
National Education Policy (NEP) envisages Catalysing Quality Academic Research in all Fields through a New National Research Foundation. This has to be implemented in principle. None of our universities rank at top in global ranking as a result our research does not impact the global thinking. To become a superpower India has to influence the decision making at international forum. There has been time when Indian scriptures were quoted to impose tax on agriculture or drop an atom bomb. Commentary on Geeta and Chanakya Neeti are being taught in leading universities of the world. The golden era will be of no use if the measuring yardstick remains with the west.
Conclusion.
The international rating agencies offer valuable insights into global market perceptions; therefore, India must carefully take benefit of their assessments and consider these alongside other parameters prudently in making economic decisions. Balancing the perspectives of international agencies with India's own analysis and priorities will ensure a holistic approach to economic management. The author looks forward to the time when world economy will be judged by Indian rating agencies. The task is challenging, road is less travelled but it is the only way. It is high time that we invest time resources and intent to realise this dream.
By Rakesh Kumar
(The content of this article reflects the views of writers and contributors, not necessarily those of the publisher and editor. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Delhi/New Delhi only)
Leave Your Comment