Moody's upgrade is positive collateral from reforms carried out: CEA

For all concerns regarding debt and fiscal, we are going to see a clearer picture in the coming months: Arvind Subramanian

Chief Economic Advisor Arvind Subramanian has been one of the most vocal critics of what he says have been ‘inconsistencies’ in ratings by the big three agencies when it comes to India vis-à-vis other emerging economies, especially China. Moody’s action was a clear recognition of the reform measures undertaken by the government, Subramanian told Dilasha Seth and Arup Roychoudhury. Edited excerpts:

Finally, we see a ratings upgrade for India. Do you feel vindicated?

It is a positive step. We have long argued that this was overdue because relative ratings of India versus other countries, China for example, were a bit skewed. And of course, China was first downgraded and India was upgraded. So, the relative thing has been reiterated.

Do you feel that our reforms are getting recognised?

This is indeed recognition of all reforms the government has carried out, including the goods and services tax, the insolvency and bankruptcy code, bank recapitalisation, and macro stability, among others. But, we need to keep everything in perspective.

The ratings agency has  also highlighted concerns related to India’s debt position and argued the fiscal deficit needs to be in check. Where are we on that?

For all concerns regarding debt and the fiscal, we are going to see a clearer picture in the coming few months. I think we should keep all of this in perspective. The ratings upgrade is nice positive collateral from the reforms we have carried out.

Standard & Poor’s (S&P) has said India needs to address its weak fiscal position.

S&P is entitled to its views. My slightly cheeky way of saying this would be that we showed the inconsistency in ratings of us versus others. Now, there are inconsistencies among the ratings agencies as well.

Do you expect a revision in the fiscal target for the year?

We will see that in a few months.