Advertisement
Saturday, Dec 04, 2021
Outlook.com
Outlook.com

Outlook Business Exclusive: K Subramanian’s Last Interview As CEA

Subramanian took charge on December 7, 2018, five months after his predecessor Arvind Subramanian abruptly resigned citing family commitments.

Outlook Business Exclusive: K Subramanian’s Last Interview As CEA
Outlook Business Exclusive: K Subramanian’s Last Interview As CEA
outlookindia.com
2021-10-08T19:19:58+05:30

Even as international ratings agency Moody’s upgraded India's sovereign rating from negative to stable, the government is attaching little importance to downgrades or upgrades by ratings agencies. “What we are looking at is that it (rating) should not go below investment grade. All kinds of investments coming into the country depend on that grading,” outgoing chief economic adviser (CEA) to the government KV Subramanian told Outlook Business in his last interaction the night before he stepped down as CEA.

The CEA on Friday announced that he would be returning to academia after successful completion of his three-year term as the CEA. Subramanian took charge on December 7, 2018, five months after his predecessor Arvind Subramanian abruptly resigned citing family commitments.

Moody’s had said that the decision to change the outlook endorsed its view that the downside risks from the negative feedback between the real economy and financial system were receding. The agency affirmed India’s sovereign credit rating to Baa3.

“Moody’s, in general, is very conservative with their ratings. They are always behind the curve. In the present economic scenario, with activities picking up, macro-economic data showing signs of recovery, the banking reforms that have been done – adding all that together, Moody’s is gapingly behind the curve with respect to India,” Subramanian said.

The Indian government has announced multiple capital infusions to avert risks to the health of the country’s financial system. The agency said that risks from the high debt burden and weak debt affordability continue to exist, but the prevailing economic environment would enable a gradual reduction of the general government fiscal deficit over the next few years. This would prevent further deterioration of the sovereign's credit profile, the agency said.

The ratings agency stated that an economic recovery is underway and activity is picking up and broadening across sectors. It expects India's real growth to average around 6 per cent over the medium term.  "The growth projections take into account structural challenges, including weak infrastructure, rigidities in labour, land and product markets that continue to constrain private investment and contribute to post-pandemic economic scarring," the credit agency informed.

Fitch Ratings, on the other hand, slashed India’s growth forecast for FY22 to 8.7% from 10%, due to the severe second Covid-19 wave. Fitch said that the second wave would ‘delay rather than derail’ economic recovery. It raised FY23’s growth forecast to 10% from 8.5% estimated earlier.

Advertisement

Outlook Newsletters

Advertisement
Advertisement
Advertisement

Read More from Outlook

Shaheen Bagh, CAA, Farmers’ Protest: Hip-Hop Is The Voice Of Dissent In India

Shaheen Bagh, CAA, Farmers’ Protest: Hip-Hop Is The Voice Of Dissent In India

Young, brash and little-known artistes are using hip-hop as an outlet to speak up and speak out.

World Disability Day: Visually Impaired Girls In Himachal Use Education To Dispel Darkness

World Disability Day: Visually Impaired Girls In Himachal Use Education To Dispel Darkness

Umang Foundation in Himachal Pradesh has helped many blind and visually impaired persons achieve their dreams by giving them access to higher education.

Mayank Notches Maiden 100 Vs NZ – Statistical Highlights

Mayank Notches Maiden 100 Vs NZ – Statistical Highlights

Mayank Agarwal's ton against New Zealand on Friday was his first since his 243 vs Bangladesh in 2019 at Indore.

Kashmir: Ghulam Nabi Azad Emerges As Key Player In J&K With Or Without Congress

Kashmir: Ghulam Nabi Azad Emerges As Key Player In J&K With Or Without Congress

Crowds at Congress leader Ghulam Nabi Azad's recent rallies show that he will be a key player in elections in Jammu and Kashmir, when they happen.

Advertisement