India deserves better credit rating, finance ministry tells Moody’s

“Moody’s should take a fresh look at the long-term credit strengths of the Indian economy and consider a long due credit rating upgrade for India’s sovereign rating,” a finance ministry official said after a meeting with the rating agency’s representatives

New Delhi: India on Monday told global rating agency Moody’s that it deserves higher rating, at least two notches above the present grade, on the back of improvement in basic economic parameters witnessed in the last few years, reports PTI.

“Moody’s should take a fresh look at the long-term credit strengths of the Indian economy and consider a long due credit rating upgrade for India’s sovereign rating,” a finance ministry official said after a meeting with Moody’s representatives here on Monday.

The officials, led by Department of Economic Affairs secretary R Gopalan, impressed upon Moody’s to upgrade India’s rating to ‘Baa1’, two notches above its current rating. Moody’s had last upgraded India’s rating to ‘Baa3’ (with stable outlook) in 2004. Baa3 means medium grade with moderate credit risk.

Besides, Moody’s had assigned a ‘Ba1’ with a positive outlook rating to India’s local debt.

India’s long-term growth prospects arise from a high savings and investment ratio, favourable demographics, rapid progress in infrastructure development and a stable democratic polity, the official said.

“India has low external debt to gross domestic product (GDP) ratio, high foreign exchange reserves, deep domestic capital markets and diversified domestic holdings of sovereign debt. It outperforms its ‘Baa’ peers on these indicators,” he added.

Last week, the rating firm had lowered the outlook on the Indian banking sector to negative from stable saying that slow global economic growth could impact profitability.

The move did not go down well with the government and the bankers who termed the move as unwarranted and said the Indian banks are better off than their global peers.

The official said the government is actively working towards structural reforms in the economy.

In the meeting, the finance ministry officials told Moody’s that the policy measures by the government includes fuel price hike, clearing 51% foreign direct investment (FDI) in multi-brand retail by the Committee of Secretaries (CoS) and increasing of foreign institutional investment (FII) limit in infra bonds to $25 billion among others.

They added that the government is on the path of fiscal consolidation for the last seven years, but it was interrupted by the global financial crisis in 2008.

“Indian economy has shown significant improvement in FDI flows and total exports this year. Due to uncertainties in the global financial markets, they have been muted this year, but are expected to pick up soon,” the official added.

The meeting was also attended by Chief Economic Adviser Kaushik Basu and officers from different departments in the ministry of finance, power, fertiliser and petroleum and natural gas.

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Draft cabinet note on FDI in multi-brand retail circulated

The decision on multi-brand has been delayed, as there were concerns over its impact on the neighbourhood kirana shops, which account for over 90% of $590 billion retail trade. These concerns have been voiced by several political parties and traders’ unions

New Delhi: The industry ministry has circulated a draft Cabinet note for allowing foreign direct investment (FDI) in multi-brand retail, a move which will allay industry's concern over policy paralysis, reports PTI.

The draft note circulated for inter-ministerial consultations is in line with the recommendations of the high level committee of secretaries, headed by Cabinet secretary Ajit Kumar Seth.

“The note has put in detail comments similar to those made by the Committee of Secretaries (CoS)... All the concerned departments will send their comments within two weeks,” an official in the Department of Industrial Policy and Promotion (DIPP) said. The note was circulated by DIPP last week.

He said that decision on hiking the cap of foreign direct investment in single-brand retail is also expected soon. At present, the country allows 51% FDI in single brand retail, 100% in cash and carry (wholesale) business, but bars it in multi-brand retail.

The decision on multi-brand has been delayed, as there were concerns over its impact on the neighbourhood kirana shops, which account for over 90% of $590 billion retail trade. These concerns have been voiced by several political parties and traders’ unions.

But industry leaders, including Reliance Industries’ Mukesh Ambani and Wipro’s Azim Premji have expressed their worries on the “policy paralysis” which has affected decision-making in the government, following several scams hitting it.

The CoS had recommended allowing 51% FDI in the politically-sensitive sector with several riders. These included a minimum foreign investment of $100 million.

It also recommended that at least 50% of the investment and jobs should go to rural areas and the entities with FDI should source at least 30% of their requirements from the MSME sector.

Several global retailers like Wal-Mart are waiting in the wings for a full-scale entry into India’s multi-brand retail segment.

Another condition suggested by the CoS was that half of the minimum overseas investment should be in developing back-end infrastructure like warehousing and cold storage.

Besides, the global chains should be allowed only in 36 large cities which have population of over one million.

However, the retailers should be allowed to open shop even within 10 km radius of these cities, as there are space constraints in the big townships.

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Maruti raises prices of diesel cars by up to Rs10,000

The company has hiked the price of the diesel variants Ritz by Rs2,000, while that of Swift, SX4 and DZiRE have been raised by Rs10,000 each. In a mail to its dealers, the company cited reasons of higher input costs and unfavourable yen appreciation

New Delhi: The country's largest car maker Maruti Suzuki India (MSI) has hiked prices of its diesel cars by up to Rs10,000 with effect from today on account of higher input costs and appreciation of Japanese yen, reports PTI.

The company has sent mails to its dealers across the country informing about a price hike on diesel versions of its compact cars Ritz and Swift and sedans DZiRE and SX4 between Rs2,000 and Rs10,000, sources said.

When contacted a company official confirmed the development.

“MSI has raised prices of all its diesel cars with effect from today. In its mail to dealers, the company cited reasons of higher input costs and unfavourable yen appreciation,” a source said.

The strengthening of yen has increased the cost of import of components from Japan.

The company has hiked the price of the diesel variants Ritz by Rs2,000, while that of Swift, SX4 and DZiRE have been raised by Rs10,000 each.

Before this hike, the diesel version of the Ritz was priced between Rs4.93 lakh and Rs5.29 lakh. Swift is priced at Rs5.17 lakh-Rs6.38 lakh range.

While the DZiRE is priced at Rs5.86 lakh-Rs7.20 lakh, SX4 is available between Rs7.79 lakh and Rs9.01 lakh.

All the above prices are for ex-showroom, Delhi.

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