It is commendable that at least now Mr. Manmohan Singh and his government have realized that rating done by various rating agencies do not speak the truth.
Government has been rated poor and it is the government which is facing problems due to downgraded rating and perhaps this is why Manmohan Singh has expressed his displeasure on rating agencies.Government is now afraid of rated as JUNK by rating agencies.There is no doubt in it that fiscal problems are enormous and have gone beyond control.But there is truth in it also that rating agencies gives more value on money they get in lieu of their report.
I have been harping on since long that majority of officials of rating agencies, majority of Chartered Accountants, Valuers , Advocates submit their valued reports depending upon the value they receive in lieu of their report. They are least bothered with ground realities of the companies or banks or the government they are rating. For them it is money and money only which matters much. Since government, banks and insurance companies , private and public sector undertakings all take costly and important financial decisions based on only these reports , they all worship valuers, advocates, CAs, rating agencies to get favourable report from such agencies. All fraud and all financial irregularities are committed with mutual cooperation of all of them.
There are some exceptions but in general,CA can certify all irregularities, all fraudulent transactions and all cases of tax evasions if the companies they audit give them adequate money as they demand. Similarly a valuer who values landed properties of a business man who wish to secure sanction f credit facilities from a bank gives the valuation report as per fee they receive from the prospective loan seeker. Value van be inflated to any extent and there is no one to check it or to punish the valuer if the same is overvalued. Similarly advocates give legal opinion even on fake deeds if they are paid handsome fees.
Bankers as also all government departments and PSUs normally work in nexus with such unscrupulous valuers, CAs and advocates to favour a loan seeker or a corporate house and all of them extract good amount of money for their favour to loan seeker.
As a matter of fact majority of such officials are not bothered whether loan remains standard or become Non performing asset in short period of time. Similarly rating agencies rate a company after extracting lacs of rupees in lieu of their rating.It is important to say here that as per government guidelines all borrowers have to obtain rating from external rating agencies like ICRA, FITCH, CARE etc if they have to avail credit facilities of amount more than Rs.5.00 crores from any bank.
I therefore praise great economist Mr. Manmohan Singh for his admission that he is in disagreement with reports of rating agencies. Now it is to be seen what corrective steps he takes.
The highest auditing constitutional authority called as CAG have submitted many startling audit reports exposing the evil and fraudulent intention of ruling government. CAG has proved by their consecutive reports that the current government has caused huge loss to the government and to people of India.Again none of ministers including Manmohan Singh is not ready to accept the same and they think it wise to treat Mr. Binod Roy and his Team under CAG as senseless and impractical.
Time has come when great clean image PM will tell the country that Chartered Accountants are not to be fully relied upon .
Only the bearer knows where the shoe pinches.
This why I always say that Satyam like fraud masters are sitting in all offices and auditors like PWG are purchasable commodity.
Sore with ratings, PM downgrades agencies
TNN | Aug 17, 2012, 04.20AM IST
NEW DELHI: Prime Minister Manmohan Singh on Thursday expressed his disagreement with rating agencies' bleak prognosis of the outlook for Indian economy, saying that they are prone to exaggeration.
"I don't want to criticize any rating agency. Sometimes they overdo," the Prime Minister told reporters when asked about the spate of downward revision in growth projections by rating agencies, and their concern over the weak fiscal situation.
This was the second time in a space of six days when the PM has expressed his unhappiness with the statements of rating agencies. On Saturday, he reacted to the grim assessment of Moody's Analytics by saying, "It is a cause of concern, but one should not draw unwarranted conclusions. The fundamentals of Indian economy are strong."
Importantly, Singh indicated that the government was ready to take a fresh stab at taxation reforms: an area where government's track record has been deficient. He focused on Goods and Services Tax (GST) saying its early implementation will be a testimony to India's readiness to move forward. "If GST is done, it will be a good statement of India's commitment to growth," Singh said, adding that finance minister P Chidambaram was already engaged with CMs and the empowered committee of state finance ministers. The states have held out because they are not satisfied with the compensation on offer, and are also demanding greater flexibility and say in fixing rates.
Singh, however, struck a non-partisan note, appealing for cooperation of all political parties. " We need to re-think, India needs to think big. Political parties need to work together to realize the high growth of 9% which India is capable of," he said.
He also explained that the appeal he made in his I-Day address for political consensus on economic growth was not meant to be a criticism of the Opposition. There are problems within the coalition and there are problems with the Opposition," he said.
17 AUG, 2012, 04.50PM IST, REUTERS
PM Manmohan Singh warned of ratings downgrade risk by own advisers
NEW DELHI: Advisers to Prime Minister Manmohan Singh issued a stern warning to the government on Friday on the need to rein in the country's fiscal and current account deficits to avoid the risk of a creditratings downgrade to junk status.
They urged the government to raise subsidised diesel prices and adopt measures to attract foreign investment, both of which would help ease pressure on the twin deficits and so help an economy that has shifted down several gears this year and the weak rupee.
However, economists doubted the ideas would be turned to action anytime soon.
The suggestions are "well meaning and sound," said Rajeev Malik, a senior economist at CLSA in Singapore. "But the political will to implement the solutions has been lacking. Technocrats cannot do anything about that."
India's economic growth has lost momentum due to global headwinds, sluggish policymaking and more lately worries about a drought in parts of the country. Fearful of a popular backlash, the government has failed to cut expenditure or liberalise the economy to attract investment.
Prime Minister Manmohan Singh's economic advisory panel released a report that acknowledged the economic down shift, which Singh declared this week was a national security issue. However, analysts said some of the forecasts were optimistic.
The panel, for example, cut its forecast for economic growth in the year to next March (2012/13) to 6.7 per cent. While that was down from a previous forecast of 7.5-8 per cent, it is much higher than projections by private economists, who see growth sliding to 5.5 per cent, a 10-year low.
The panel highlighted the swelling fiscal deficit as a major concern and urged the government to raise diesel prices, a long-promised policy that has failed to get political support. Indeed, diesel could exert more pressure on the budget because its use is set to spike this year as farmers turn to pumps to irrigate their fields during the drought.
"Given that ratings agencies are watching the situation, I think the budgeted fiscal deficit at 5.1 per cent is a non-negotiable issue" said M. Govinda Rao, a member of the advisory panel.
Economists suggest the government is moving towards a deficit in 2012/13 of around 6 per cent of GDP and credit default swap markets already price the country at junk, or non-investment grade.
Global agencies Fitch Ratings and Standard & Poor's Ratings Services this year warned that India may become the first of the BRICS group of large emerging markets to lose its investment grade rating if it did not control the fiscal and current account deficits.
The panel urged the government to raise tax revenues, including by collecting unpaid taxes. It said New Delhi should resurrect a push to allow foreign investment in supermarkets after its attempt to open up the sector flopped late last year.
This time, the foreign investment limit should be capped at 49 per cent, not the 51 per cent level that sparked fierce opposition, it said.
The panel's call to bring the fiscal deficit under control echoes similar comments from the central bank.
"The best way to prevent a ratings downgrade is to put in place a sustainable process of fiscal consolidation because that's the most important parameter, indicator on which that risk or threat has manifested," Deputy Governor Subir Gokarn said on Thursday.
India's current account, the broadest measure of its trade in goods and services with the rest of the world, ballooned to a record deficit of $21.7 billion or 4.5 per cent of GDP in the March quarter.
The panel forecast the deficit would narrow in 2012/13 to 3.6 per cent from 4.2 per cent in 2011/12 off the back of lower import bills for oil and gold. But panel chief C. Rangarajan said the deficit needed to shrink to 2.5 per cent. Above that level the rupee comes under pressure, a panel member said.
The panel raised its inflation forecast for the end of 2012/13 to 6.5-7 per cent, up from an earlier forecast of 5-6 per cent, to reflect expectations for higher food prices as monsoon rains are well below average.
"The estimates are pretty much in line with Reserve Bank of India's projections, but the growth number seems to be on the optimistic side on the assumption that agriculture growth won't be as slow as (the) market expects," said Rahul Bajoria, regional economist with Barclays in Singapore.
The panel's views are closely watched, however, because they are used by the prime minister's office to determine policy. The finance ministry produces its own estimates.
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