What we must focus on for India to get a sovereign rating upgrade
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Deep Mukherjee
Our risk of a downgrade in the next 12 months is negligible but we must improve on qualitative factors within our control
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India’s handling of its sovereign-rating issues over the past two decades may be described as reactive and restrictive. Much commentary by stakeholders tends to appear around events that entail a perceived threat of a downgrade or a moonshot at an upgrade. The debate so far has largely been focused on a narrow set of rating drivers, such as India’s low external debt, high growth rate, fiscal deficit and some irrelevant factors like the size of India’s economy. The cohesive government effort that saw India improve its rank on Ease of Doing Business (EODB) charts is missing when it comes to its sovereign rating. The starting point for that should be a more nuanced understanding, by all stakeholders, of the what and hows of th
Economic Survey 2020-21: Key takeaways
Chief Economic Advisor KV Subramanian
(ANI)
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Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman presented the Economic Survey 2020-21 in the Parliament today.
The key highlights of Economic Survey 2020-21, which is dedicated to the COVID Warriors, are as follows:
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Growth leads to debt sustainability, says Economic Survey
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Last Updated: Jan 30, 2021, 07:08 AM IST
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Synopsis With the Indian context of potential high growth, the interest rate on debt paid by the Indian government has been less than India s growth rate by norm, not by exception, it said.
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New Delhi: Building a case that growth leads to debt sustainability in an emerging economy like India because of higher gross domestic product and lower interest rates, the Economic Survey 2020-21
said such clarity in direction of causation is not seen for advanced countries with lower growth rates.
Citing simulations, it said that in a worst-case scenario, where real growth is only 4% in the next 10 years, public debt is sustainable as it established that growth leads to debt sustainability, not necessarily vice-versa.
Swedish PM Stefan during the recent Summit with PM Modi imparted a new thrust in Indo - Swedish relations. Defence and Security remain the key docket where Swedish defence OEM SAAB renewed its commitment to India of laying production ecosystem of its flag horse Gripen E for the lucrative MRFA 114 fighter jets program. Besides, SAAB is focusing on critical navel systems like G1X family of latest radars, AUV 62 autonomous underwater vehicle and ship design with stealth signature management. BW Businessworld’s Defence Editor Manish Kumar Jha speaks with Ola Rignell, Managing Director, SAAB INDIA on such projects and collaboration.
Making a case for an optimal fiscal stance, the Economic Survey on Friday said growth leads to debt sustainability and not necessarily vice-versa. This is because debt sustainability depends on the Interest Rate Growth Rate Differential (IRGD) i.e. the difference between the interest rate and the growth rate in an economy. With the Indian context of potential high growth, the interest rate on debt paid by the Indian government has been less than India s growth rate by norm, not by exception, it said. It suggested that sustainable debt-to-GDP ratio should be maintained over the next decade irrespective of growth and interest rate indicators.