New Lokpal Bill presented amid stiff opposition

The new Lokpal Bill too was met with stiff opposition from various political parties and outright rejection from Team Anna. The Bill was introduced in parliament on Thursday where members of various political parties termed the Bill voiced their dissent on the issue of reservation in the Bill and the inclusion of the PM in the ambit of the Lokpal. Leader of Opposition Sushma Swaraj earlier said that the reservation in the Lokpal was unconstitutional and that religion based reservation was against the constitutional policy of the government. RJD chief Lalu Prasad Yadav accused social activist Anna Hazare and his team of dictating terms to the Parliament while Left parties dismissed Harzare saying that he was not a second Mahatma Gandhi, reports said.

Yadav along with Mulayam Singh and Congress MP Raj Babbar were earlier pushing for the re-insertion of minority quota in the Lokpal, which was removed on Wednesday night, reports added. Mukherjee, however, dismissed the Opposition’s claims that the Bill was being rushed due to pressure from Hazare. "There was a discussion in both the Houses. Somebody is talking of duress...where is the question of duress? Somebody, who is advising me to be strong, should have advised his political leaders when they went and sat on the dharna manch of Sri Anna Hazare, and what they said...please check out," reports said quoting Mukherjee. The incessant resistance from Team Anna and the Opposition seems to have gotten on Congress President Sonia Gandhi’s last nerve as she says she is ready for a fight with the Opposition and Team Anna over the Lokpal Bill. "We are being criticised and attacked for not tackling the scourge of corruption. This is deliberate and malicious misinformation," Gandhi said earlier at the meeting of the Congress Parliamentary Party.

Taking a hint from Gandhi’s stand, Bareilly MP Praveen Aaron sent a strong-worded letter to Hazare, reports said. "Your continuous canard-spreading and false propaganda against the Congress Party, even after its sincere efforts, makes it amply clear that your 'movement against corruption' has drifted into being a 'politically-motivated planned conspiracy' against the Congress and to promote otherwise bleak political fortunes of the BJP," said the letter. While the Parliament resumes on Dec 27 in the extended Winter Session, Anna Hazare will go on an indefinite fast from the same day at Mumbai’s Azad Maidan to protest the new Lokpal Bill.

Moody's reaffirms India's debt rating at 'Baa3'

Moody's Investors Service unified the government of India's local and foreign currency bond ratings at Baa3. The outlook on the ratings is stable. Today's rating action was in accordance with Moody's Ratings Implementation Guidance that Moody's will maintain a gap between a government's domestic and foreign currency debt ratings infrequently and only in compelling cases. The guidance was based on an analysis of sovereign defaults in the last two decades, which does not offer empirical justification for a rating bias in favor of either local currency or foreign currency government debt.

Ratings Rationale

India's Baa3 rating incorporates credit strengths such as a large, diversified economy, robust medium term growth prospects and a strong domestic savings pool that facilitates the financing and refinancing of the government's relatively high debt burden. It also encompasses credit challenges such as wide and persistent fiscal deficits, a policy process often hamstrung by domestic politics, susceptibility to inflationary pressures, and the limitations that poor social and physical infrastructure place on growth.

Rating Outlook

The stable outlook on India's rating reflects Moody's medium-term assessment of the country's growth, fiscal, and balance of payments outlook, relative to other countries we rate. Moody's expects India's growth downturn to persist over the next two quarters, but notes that GDP growth rates will remain above the average for similarly rated peers. Moreover, India's structural strengths such as its diverse sources of economic growth and its private sector's productivity will help revive investment growth over the next 12 to 18 months, if, as expected, inflationary pressures recede and domestic interest rates ease. Global risk aversion has heightened the volatility of portfolio flows into India. However, India's foreign exchange reserves are large enough, relative to the country's current account deficit and annual external debt repayment obligations, to allow the economy to weather current portfolio investment volatility. While recent rupee depreciation will raise foreign debt repayment costs for individual firms, it could also help boost export competitiveness and soften import demand, thereby narrowing the current account deficit over the next year.

Weak fiscal metrics remain a constraint on India's rating. Moody's notes that the government's debt and deficit ratios are higher than those of similarly rated countries. The fiscal deficit is vulnerable to cyclical downturns, and the government is expected to miss budgetary targets this year. Still, due to high nominal growth, government debt/GDP ratios have been declining over the last five years, including during the global financial crisis. Moreover, the average maturity profile of India's government debt is relatively long, which reduces the government's annual gross financing requirements. Another mitigating factor is that India's deep pool of private sector savings, which is significantly stronger than that of similarly rated peers, allows the government to fund itself from a stable domestic base and in its own currency...Read More

Reforms to alleviate Financial stress on Indian States: Fitch

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