By Ruma Dubey

The Finance Minister says, “There have been 10 sovereign rating since 2012; S&P step only a revision of outlook, not a downgrade.” The FM’s office then went on to issue a Press Release, waxing eloquent about how great India remains as an investment decision. It was actually funny if not infuriating.

Well, that’s nonchalance or ignorance about the seriousness of the situation? More than dashing out a Press Release to soothe the markets, the FM needs to roll up his sleeves and get to work.

Actually, this is the perfect thing to happen. The Govt is so involved in this entire coalition politics that it has forgotten that it needs to run the country also and not just focus all its energies on keeping its power intact. The Govt seems to be in some kind of stupor and this strong kick on the butt is probably for the best.

This is not a downgrade; that’s right. But we are just a step away from a downgrade and that is something which India just cannot afford to have. Being downgraded to ‘junk’ would make the future for the country extremely difficult; more than what it is today.

The Govt over the past few months has just done about nothing and this was to come, rather it was inviting this ‘revision’. The drama over the much railway fare hikes roll back was probably the lowest point in the UPA regime. We are not even able to get by with a minimal railway fare hike so how can one expect the Govt to hike fuel prices? Now that we know that it is all about politics, this roll back made it clear that any important economic decision, which will result into a price hike for the ‘aam aadmi’ will not go through.

The FM did nothing in the Union Budget. Yes, his budget is inflationary, more so for the middle class and the rich. So does this mean that in this era of UPA, one should be poor, ideally a farmer because the likes of Mamataji will protect you but never a middle class and surely never a rich; that would be a curse!

Economically, we are nearing a complete mess and if this policy paralysis continues, things will only get worse. 2013-14 will be an election year and if this is how things will work till then, well, it could get ugly.

At this juncture, taking the risk of sounding unpatriotic, this revision in outlook by S&P was perfect and one hopes that others – Moody’s and Fitch also follow suit. We need this international criticism for the way business is being conducted by the Govt. The UPA may mouth ‘aam aadmi’ all the time, but one cannot help but feel that a stock market crash and perception of the FIIs is more important to the Govt. And this revision is damning for the FII investment so hopefully, it will wake up and work.   

No doubt, investors will not exactly panic on this news alone and scoot from the market. Yes, they will now become more cautious. Rating downgrade will not happen immediately but the Govt needs to get to work. Maybe the first step which the Govt will take could be a hike in the fuel prices. But that alone will not be enough.

Actually, it is because of an intense sense of patriotism that there is applause for the revision by S&P. After all, if we love someone, we should have the ability to criticize and correct, or else, that love could kill. 

PS: Cannot help but wonder – Can Mamataji please throw a tantrum and ask S&P to roll back its rating revision?