| Rutherfurd: Plain-speak
New Delhi, Nov. 26: Moody’s may have to lower India’s domestic rating because of the country’s rising fiscal deficit, even though it was looking at improving the country’s external rating due to its burgeoning foreign exchange reserves.
Speaking at the plenary session of the two-day WEF meet which concluded here today, Moody’s president and chief executive officer John Rutherfurd Jr, co-chair of the India Economic Summit said, “If India meets its challenges then we would like to increase its domestic currency rating with time.”
Standard & Poors has already downgraded India’s domestic credit rating in the past citing similar reasons.
Lord Charles Powell of Bayswater, another co-chair of the India Economic Summit 2002 and a key aide of former British Prime Minister Margaret Thatcher, cautioned that foreign investors wanted to see stability and they were turned away by communal violence and Indo–Pak tension. “Investors get switched-off by seeing political, social and economic instability,” said Powell.
However, he recognised the present government’s efforts to improve relations with the United States of America. This, he said would improve investors’ image of India. He added that India’s position would be enhanced if it worked successfully with the multilateral trading system.
Infosys chief and another co-chair of the India Economic Summit N. R. Narayana Murthy, said the country needs to make manufacturing more efficient by removing the inefficiencies in the supply chain, including those in the customs clearances and in ports. India also needed to benchmark itself against global best practices.
“On the part of the government it is essential to reduce inefficiencies in the supply chain by ways of issuing licensing and having a flexible labour policy,” he said, adding “on the other hand, industry should help improve quality processes, benchmark themselves and work towards higher productivity”.
India Inc as a whole did less grumbling than usual at such gatherings over tariff barriers crumbling, and instead saw the future as a more open world where industry would have to gear up to face imports at zero customs duty.