India hits back at S&P, questions transparency of its methodologies

NEW DELHI: Hitting out at the rating agency Standard & Poor's, India said on Tuesday that its methodologies were not transparent and that the country's economy was far better than the peers it was clubbed with. It also demanded S&P withdraw the comments made on the country's leadership.

"We are not happy with what they are saying...The process they follow is not very transparent. They have some hidden criterion which they have not been able to explain to us," said R Gopalan, secretary, department of economic affairs.

Corporate affairs minister Veerappa Moily also lashed out at the rating agency for describing Prime Minsiter Manmohan Singh as 'unelected' leader. "How can a credit rating agency qualify the Prime Minister as unelected leader? Prime minister is an elected member of the Rajya Sabha and has the full support of about 350 members, allies and supporting parties. I do not think this kind of support was available for any Prime Minister," Moily said.

"There is substantial opposition within the party to any serious liberalization of the economy. Moreover, paramount political power rests with the leader of the Congress party, Sonia Gandhi, who holds no Cabinet position, while the government is led by an unelected prime minister, Manmohan Singh, who lacks a political base of his own," S&P said in a report on Monday.

Moily demanded that the rating agency withdraw its comments. The rating agency had on Monday warned that India could be the first BRIC nation to lose investment-grade rating, citing economic slowdown and political roadblocks to policy-making.

"I do not know if they have instituted a system of advance warning," Gopalan said, adding that the finance ministry will soon have a telecon with the agency to assert its point that the country's fundamentals continue to be strong.

"We believe there's a need to engage with them to emphasise on various parameters, including the steps the government had taken to boost growth, to contain deficit and to tackle the external situation," Gopalan said.

Finance ministry officials had held detailed discussions with the S&P representatives in April but the agency had still gone ahead and cut outlook on sovereign rating of 'BBB-' to negative from stable.

"We had asked them to share with us their findings before the ratings are assigned so that we can explain our point of view. We don't seem to be getting transparent answers," Gopalan added.

Finance minister Pranab Mukherjee had on Monday rejected the S&P report and expressed confidence that there would be a turnaround in economic growth prospects in the coming months.

"You cannot judge us on a few parameters. We think we are in much better condition than they think we can be," Gopalan said, who has just returned from a roadshow on the qualified foreign investor scheme in the Gulf.