Moody’s applauds India’s budget, says credit positive for rating

Other ratings agencies such as Standard and Poor’s and Fitch, which had threatened to downgrade India’s sovereign credit rating, also are likely to come out with fresh assessment in the backdrop of the Budget proposals

Global ratings agency Moody's Investor Services today applauded finance minister P Chidambaram’s Budget saying that it pursues realistic fiscal consolidation path and is “credit positive”. The budget raises hopes of an upgrade in the country’s sovereign credit rating, the agency added.


“India's budget pursues realistic fiscal consolidation, a credit positive for the sovereign”, said Moody’s in its credit outlook for the country.


Chidambaram in his Budget for 2013-14 proposed to bring down the fiscal deficit to 4.8% of the Gross Domestic Product (GDP) from 5.2% in the revised estimates for the current financial year.


“This plan of modest fiscal consolidation is credit positive for the sovereign because, against a backdrop of subdued GDP growth and upcoming elections, it is a realistic effort to correct India’s macroeconomic imbalances,” the rating agency said.


Earlier, ratings agencies such as Standard and Poor’s and Fitch had threatened to downgrade India’s sovereign credit rating to junk grade in view of the worsening fiscal position of the government. They also are likely to come out with fresh assessment in the backdrop of the Budget proposals.


Moody’s had assigned BAA3 rating to India, which indicates investment grade rating with stable outlook.


The report further said fiscal consolidation proposed by Chidambaram could pave the way for monetary easing, which would revive growth.


The extent of easing, however, would depend upon the assessment of the Reserve Bank of India (RBI) on the commitment of the government to contain fiscal deficit in the Budget.


The RBI had been insisting on a sustained commitment to fiscal consolidation to help it ease monetary policy.


RTI Judgement Series: DIMTS, substantially funded and controlled by the Delhi govt, is public authority

Delhi Integrated Multi-Modal Transit System (DIMTS), a 50:50 JV between the Delhi govt and IDFC, fulfilled both the conditions of a public authority as laid down in Section 2(h)(i) of the RTI Act, ruled the Commission. This is the 51st in a series of important judgements given by former Central Information Commissioner Shailesh Gandhi that can be used or quoted in an RTI application

The Central Information Commission (CIC), while announcing that the Delhi Integrated Multi-Modal Transit System (DIMTS) is a public authority under the Right to Information (RTI) Act, asked it to appoint a Public Information Officer (PIO) and First Appellate Authority (FAA) and provide the information sought by the applicant.


While giving this important judgement on 15 February 2010, Shailesh Gandhi, the then Central Information Commissioner said, “The Commission finds that DIMTS is substantially financed by the government. It is also controlled by the Government of Delhi. If any one of these conditions were satisfied, DIMTS would be a public authority as defined in the RTI Act. Here it satisfies two conditions laid down in Section 2(h)(i) of the RTI Act.”


New Delhi resident Rakesh Agarwal, on 3 September 2009 and on 14 October 2009 sought certain information from the DIMTS. In his RTI application on 3rd September he sought following information...


1. A full set of information free of cost as required is to be disclosed u/s 4.

2. Reasons for not publishing the information as required u/s 4.

3. A copy of the shareholders agreement signed with the Delhi government.

4. Copy of the disinvestment agreement signed with Delhi government when disinvesting.

5. Copies of documents and records evidencing process/method of disinvestment.

6. Your annual accounts together with auditors reports for the last five years.

7. Copies of the minutes of board meetings since disinvestment.

8. Are you covered by the audit by CAG?

9. Are your accounts examined by PAC or Committee on Public Undertakings?

10. How much of your revenues come from the government?

11. A list of all major and minor projects received from Transport Department, Delhi up to the date of disinvestment by Delhi government.

12. A separate list of all major and minor projects received from transport department after the date of such disinvestment.

13. Copies of all project/study reports prepared by you or received from the Delhi government.

14. Copies of all agreements, contracts, tenders, MOUs, etc. signed with the transport department.

15. Copies of all agreements, contracts, tenders, MOUs, etc. signed with external agencies in pursuance of or for the execution of projects or works given to you by Delhi government.

16. Copies of all notices inviting EOLs, tenders, etc. together with the EOI and tender documents.

17. Kindly provide details as to the process and methods adopted by transport department through which projects are given to you.

18. Kindly provide details as to the process and methods adopted by you for the selection of contractors.

19. Kindly advise the present status of all projects underway and the expected date of start and /or completion together with timeliness for different stages.

20. A copy of the complete file including all notings correspondence, deliberations, study reports, agenda and notices of meetings, minutes of meetings, decisions, etc. that records and decision to shift BRT corridor to the left of the road from the centre of the road.


In his second RTI application on 14 October 2009, Agarwal sought following information...


1. Current status of the Clusters policy for buses.

2. Information in the following format for all clusters:

a. No of cluster     

b. Name      

c. Status (Whether proposed planned, approved under construction or completed.

d. Amount of money received so far from Delhi Govt.

3. Inspection of all data in respect of the above clusters and all files in respect of each cluster.

4. Inspection of all clusters on which work has started.


Suneet Mudgal, assistant general manager (HR), returned Agarwal’s first RTI application stating that DIMTS is not a public authority and that the complainant may direct his questions to the transport department. Agarwal’s second RTI application was also returned with a comment,”in this regard, you are advised to take up the request with the transport department, GNCTD as the information sought by you is about the policies and projects of the Transport Department.”


Agarwal then approached the CIC with his complaint. The Commission after registering his complaint issued a notice to DIMTS. In the notice the CIC mentioned that “prima facie it appeared that information had not been provided without reasonable cause.”


In its reply to the Commission on 5 October 2009, the DIMTS contended that is not a public authority and therefore there is no post for PIO. The Commission, on 9 November 2009, asked DIMTS to give its submission before 29th November, to show that the company is not a public authority when four out of eight directors on its board are nominated by the Government of Delhi.


During a hearing on 16 December 2009, DIMTS stated that it is not a public authority as the company is a 50:50 joint venture between the Government of National Capital Territory of Delhi (GNCTD) and IDFC.


Agarwal stated that “The company came into being by an order of the GNCTD. Moreover, 49.993% of the shares in the company are held by the GNCTD and another 49.993% are held by IDFC. The rest of the shares are held by the government nominees i.e. the chief secretary of Delhi, principal secretary (transport), principal secretary (finance) and one more nominee. The money paid by the government nominees towards the value of the shares was reimbursed by the GNCTD, thus effectively the shareholding of the government went beyond 50%.”


The CIC adjourned the matter saying that submissions from both the parties would be taken on 21 December 2009.


During the hearing on 21st December, Rajnish Gautam, advocate for the DIMTS alleged that the bench is prejudiced and he did not expect to get justice from this bench.


Mr Gandhi, the CIC, noted that Gautam had appeared before the bench earlier and had said that he should like to argue the matter at the next hearing and has now come up with the allegation of the bench being prejudiced.


The Commission asked Gautam to give reasons why he believes that the bench was prejudiced against the company and whether the bench had any known bias against DIMTS.


In his reply, Gautam stated, “The Commission already held DIMTS to be a public authority vide it letter dated 16 September 2009 wherein the Commissioner had instructed it to provide the information or face penal consequences as provided under the (RTI) Act which is against the principle of natural justice and the very basic tenets of audi altrem partem which categorically states that no one should be condemned unheard and also in view of the observation made by the Commission at the end of the proceeding dated 16 December 2009 wherein the Commissioner had opined that it would be extremely difficult for DIMTS to prove this case and therefore in view thereof and also for a better appreciation of facts and law I am requesting that the case may be referred to a larger bench.”


Agarwal, the RTI applicant, stated that “Levelling of allegations by the respondent (DIMTS) is just a tactic to delay the decision in the matter. The respondent has not come to the Commission with clean hands. On its website as well as during the hearing dated 16 December 2009, the respondent stated that the company DIMTS is a 50:50 Joint venture company in partnership with GNCTD. The fact is that by their own letter dated 1 October 2009 addressed to the finance department of GNCTD, the respondent has given a list of shareholders wherein it has shown that IDFC holds 49.998% of the shares whereas rest of the shares amounting to more than 50% are held by the Government of Delhi and government nominees.”


“Therefore, it is my request that the request of the respondent to refer the matter to a larger bench may not be acceded to. If there is any bias in the mind of the Information Commissioner, it should be against me because I am contemplating filing a writ in Delhi High Court against the order of Commissioner in another matter and this fact was mentioned to him when I was not satisfied with the decision,” Agarwal said.


The Commission noted that an allegation of prejudice has been levelled by an advocate against the statutory authority without any basis at all. “It is distressing that the minimum requirement of respect for statutory authority is lacking and no evidence has been produced to show any bias of the Commission,” Mr Gandhi said.


He then adjourned the matter to contemplate further action.


On 22 December 2009, the Commission checked papers and submission of Gautam to see if the allegations of prejudice against the Commissioner had any merit. It said, “The Commission’s notice dated 16 September 2009 stated that from the facts it appeared prima facie that the information had been denied without any reason. No decision was made by the Commission through its notice. In fact the notice also gave the respondent an opportunity to explain why the information was provided to the complainant. After receiving the submissions on behalf of the respondent, in both cases, the Commission did not decide the complaint but gave the respondent an opportunity to prove that it was not a public authority. A charge of bias appears to be inappropriate when a proper opportunity of hearing has been provided to both sides.”


“Looking at the overall conduct of Suneet Mudgal and Rajnish Gautam it appears to the Commission that their sole objective is to delay any decision in the matter. They have been unwilling to offer any rational explanations. Given these circumstances the bench decides that since no rational charge of bias or prejudice has been established, the bench will hear the matter and decide on the merits of the case,” Mr Gandhi, the CIC said while posting a hearing in this matter to 7 January 2010.


On 7th January, Mudgal submitted a letter to the Commission stating that DIMTS had moved an application before the Chief Information Commissioner requesting him to reconstitute the bench to hear the matter.


During the hearing on 7th January, Agarwal submitted a letter issued by DIMTS about its shareholding. He also submitted a copy of office memorandum issued by the transport department of Delhi government on 30 July 2009 that contains the terms of engagement of DIMTS. He further submitted that every single project of the DIMTS is that of the government and therefore it is fully financed by the public funds.


The matter was adjourned for further consideration.


The Chief Information Commissioner in its decision on 21 January 2010, rejected the application of DIMTS for re-constitution of the bench. After receiving the decision, Mr Gandhi, then issued notices to both parties for a final hearing on 3 March 2010.


During the final hearing, DIMTS gave its written submission to the Commission. When asked if he has given the list of directors of DIMTS, he replied in negative. The Commission then directed DIMTS to submit names of the directors and details of their employment before 4 March 2010.


Agarwal, the RTI applicant, stated that DIMTS managing director SN Sahai is an IAS officer on deputation from the government. The respondents stated that there are eight directors in DIMTS, out of which seven are non-executive directors.


During a hearing on 5 March 2010, DIMTS submitted list of directors of the company. The Commission said, the issue before it was whether DIMTS is public authority as per Section 2(h) of the RTI Act.


Section 2(h) of the RTI Act defines public authority as

2 (h) "public authority" means any authority or body or institution of self government established or constituted-
(a) by or under the Constitution ;
 (b) by any other law made by Parliament;
 (c) by any other law made by State Legislature;
 (d) by notification issued or order made by the appropriate Government,

and includes any-
(i)  body owned, controlled or substantially financed;
(ii) non-government organisation substantially financed, directly or indirectly by funds provided by the appropriate Government;


DIMTS is not established by or under the Constitution; by any law made by the Parliament or state legislature or by a notification or order made by the appropriate government. It is a joint venture company set up by the Government of Delhi and the Infrastructure Development Finance Company and it is governed by the provisions of the Companies Act. “Therefore, for DIMTS to be considered as a public authority it has to be established that it is a body owned, controlled or substantially financed directly or indirectly by the finds provided by the appropriate government,” the Commission said.


It said, “The Parliament in its wisdom has deliberately chosen to use the words ‘owned’, ‘controlled’ or ‘substantially financed’ with the conjunction ‘or’. Therefore each of these words must be given an independent meaning and if any one of them is applicable, the body would be considered to be a public authority.”


DIMTS stated that...

For want of definition of the work ‘Control’ within the RTI Act, reliance is placed upon other statutes which define the term as under:

i) Accounting Standard Interpretation (ASI) 24, Definition of ‘Control’ - Accounting Standard (AS) 21, Consolidated Financial Statement, defines Control as under:-

a) The ownership, directly or indirectly through subsidiary (ies), of more than one half of the voting powers of an enterprise; or

b) Control of the composition of the board of directors in the case of a company or the composition of the corresponding governing body in case of any other enterprise so as to obtain economic benefits from its activities.

ii)       Regulation 2(i) (c) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the "Regulations") defines Control as under:

-Control includes the right to appoint a majority of directors, or to control the management or policy decisions exercisable by a person acting individually or in concert, directly or indirectly, including by virtue of Shareholding or management rights or shareholders agreement or voting agreement or in any other manner.


 It would imply that the word Control includes (i) the right to appoint majority of the directors or (ii) exercise control over management or policy decisions, directly or indirectly.


Therefore, upon a bare perusal of the available definition of the word ‘Control’, it is abundantly clear that the work control would mean a stake excess of 50% or the management control of the company. Management control means and includes the act of managing and controlling the affairs and / or business by direction or regulation or administration or control or superintendence. As per and in accordance with Section 2(26) of the Companies Act, 1956, which defines and vest the substantial powers of management with the Managing Director, the management of DIMTS vests with MD & CEO of the company who is a nominee of IDFC. According to the Indian Corporate Law also, ‘Control’ is defined by direct ownership of a majority stake or at least 51% of the total shareholdings.


Mr Gandhi said, “ interpreting the RTI Act we would accept that when the appropriate government holds over 50% of the shares, it would be construed as being owned by the government. The phrase ‘substantially financed’ may then therefore be applied to a company where the shareholding of the appropriate government is 50% or less.”


In its submissions, DIMTS had stated that “In pursuance of shareholder agreement (SHA), about 50% shares were allotted to IDFC on 1 August 2007. It is pertinent to mention that at the time of incorporation of special purpose vehicle (SPV), as required under law, six shares were held by six government nominees and 494 shares were held by another government nominee for an on behalf of Lieutenant Governor of Delhi. The shareholding of the company, pursuant to the allotment of shares to IDFC, was increased to total paid up capital of 1.46 lakh shares. Thereafter, vide a board meeting of the directors dated 14 October 2009, six more shares were allotted to IDFC nominees and accordingly the shareholding of GNCTD and IDFC in the Company, in accordance with the SHA, became 50% each with paid up share capital of 1,46,090 shares of Rs1,000 each.”


“From the submissions of the respondent, it is clear that the shareholding of the DIMTS is equally shared by the Government of Delhi and the IDFC,” the Commission noted.


DIMTS in its submissions had stated that the company was managed and controlled by the Board of Management of the DIMTS which has eight directors of which four are nominated by the Government of Delhi as ex-officio members. It further stated “All directors of the company including the chairman, except the managing director and chief executive officer who is the sole executive director, are non-executive directors and no salary is paid to them.”


The Commission said, “Four of the eight members of the board of the DIMTS are government officers; therefore four of the eight members of the Board owe their positions on the board due to their nomination by the government. A government officer, once nominated by the government to perform certain functions, is expected to act in accordance with the government's position. Like any other government officer, he does not require directions from the government to carry out each of his duties—as a government officer he is assumed to be acting on behalf of the government. Thus it can certainly be stated that the government is in control of the Board of DIMTS through its nominees.”


Mr Gandhi, said, he found that DIMTS was substantially financed and also controlled by the Delhi government.


While allowing the complaint filed by Agarwal, the Commission said, “DIMTS is a public authority as defined under Section 2(h) of the RTI Act. DIMTS is directed to appoint a Public Information Officer and First Appellate Authority before 31 March 2010. It is further directed to provide the information sought by the complainant in both his RTI Applications before 15 April 2010. If the information in response to certain queries is not held by DIMTS, it is directed to transfer those particular queries to the concerned public authority within five days of receiving this order with intimation to the complainant and the Commission.”




Decision No. CIC/SG/C/2009/001472+001312/7047

Complaint No. CIC/SG/C/2009/001472+001312


Complainant                                       : Rakesh Agarwal,

                                                            New Delhi - 110002


Respondent                                        : Suneet Mudgal

                                                                  AGM (HR)

                                                                  Delhi Integrated Multi-Modal Transit System,

                                                                  First Floor, I.S.B.T.

                                                                  Kashmere Gate, Delhi - 110006


Human development and not just economic growth is what Bihar needs

It is evident that the otherwise fast growing state of Bihar lags far behind in many of the critical human development indicators. The benefit of the base effect is giving a high growth rate to the state. What is important is that the focus of the state policy needs to shift to human development

Bihar’s success story has been hitting headlines very frequently in the recent past. The story going around in various sections of the media is that Bihar is the fastest growing state of the country, even outperforming traditionally fast growing states like Maharashtra, Tamil Nadu and Gujarat. This fact gets substantiated in the recent Economic Survey. In the Economic Survey (2011-12) presented in the Parliament, it has been mentioned that in 2011-12 Bihar’s GDP grew at a rate of 16.71% which is just double of Gujarat that grew at 8.20%. The Survey also mentions that the growth in Bihar during the period of 2005-06 to 2011-12 was 10.17%, higher than Gujarat once again (refer to the data in the table below).The per capita income growth in Bihar was also 15.44% which sounds impressive by any standard. While on the growth front Bihar’s performance has been terrific without doubt, on development front the state has failed to perform and continues to be a nadir.  Bihar’s success story has in fact brought the growth versus development debate once again at the fore. Is growth in itself enough? Does growth take care of all sections of population and does trickledown effect always works?


Institutions like the World Bank and IMF have been found emphasizing the need for development more than growth. The development focus in recent times has moved to the human development index. It is pertinent to note that growth is a quantitative measure while development is more of a qualitative measure of how an economy has performed. Needless to say, concepts like the Human Development Index and the performance based on this is being used as the parameter for tracking development of economies.


Budget measures will leave small investors cold


Let us look at the development aspect in the context of Bihar. The same Economic Survey which presents a rosy picture of Bihar in terms of growth presents a completely contradictory picture in context of development. Some startling facts coming out of the Economic Survey about Bihar are as follows:


  • The poverty estimates indicate that the highest poverty headcount ratio (HCR) exists in Bihar at 53.5% as against the national average of 29.8%. In 2009-10 compared to 2004-05, Bihar has displaced Odisha as the poorest state, with Odisha's situation improving considerably in 2009-10. Lowest poverty is in Himachal Pradesh (9.5%) followed by Kerala (12%).


  • Bihar has the highest decadal (2001-11) growth rate of population (25.07%), while Kerala has the lowest rate (4.86%).


  • As per usual status (adjusted) NSS 66th round 2009-10, the unemployment rate (per 1000) among the major states is the lowest in Gujarat (18) and highest in Kerala (73) and Bihar (73) in urban areas.


  • In terms of decadal growth rate in bank branches, Haryana (59.5%) has the highest growth and Bihar the lowest (14.4%). Even a north-eastern state like Assam (16.5%) is better placed than Bihar. Himachal Pradesh (89.1%) has the highest percentage households availing of banking services while Assam (44.1%) is the lowest followed by Bihar (44.4%).


Funny facts from factsheet of mutual funds


It is clearly evident that the otherwise fast growing state of Bihar lags far behind in many of the critical human development indicators. The benefit of the base effect is giving a high growth rate to the state. Bihar has a GDP which is around one-fourth of Maharashtra and hence the base effect will continue to benefit the state in the years to as far as economic growth is concerned, while development may not happen naturally because of growth. What is important is that the focus of the state policy needs to shift to human development. More focus needs to be on spreading health access to common man, making agriculture more productive, and emphasis on education especially on primary education. The government also needs to rope in private sector for more employment generation. Bihar needs to develop not just grow.


Other stories by Vivek Sharma


(Vivek Sharma has worked for 17 years in the stock market, debt market and banking. He is a post graduate in Economics and MBA in Finance. He writes on personal finance and economics and is invited as an expert on personal finance shows.)


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