BJP uses S&P downgrade to target govt; Congress says report is not gospel truth

NEW DELHI: Standard and Poor's downgrade warning to India has prompted the Opposition to accuse the UPA government of policy paralysis, governance deficit and disconnect.
Describing it as a 'wake-up call', BJP said the government was in denial mode and questioned finance minister Pranab Mukherjee's rejection of the ratings. Congress refuted BJP's allegations, saying S&P was just another credit rating agency and its report was "not gospel truth or one that is cast in stone".

Gujarat chief minister Narendra Modi, who has been targeting the Congress-led government at the Centre, said "UPA's toxic combination of poor economic decisions, lack of reforms and political roadblocks is pushing India to the brink." Modi tweeted, "S&P says division of roles between 'powerful' Congress president and 'appointed' PM has weakened policy making framework and caused political vacuum."

In the Capital, party spokesperson Prakash Javadekar told reporters that instead of taking tough decisions, the government was in denial mode. "This won't work as international investors accord credence to these ratings. Such downgrades will adversely impact already deteriorating Indian economy.

The finance minister can put up a brave front in the face of such an adverse possibility by rejecting the report, but the serious international media are also presenting a gloomy picture of Indian economy. Let us not forget that such a downgrade will make international borrowing costly," he said.

Blaming the situation on the "disconnect between 10 Janpath and 7 RCR... the jhola walas and Montek Singh Ahluwalia", he said only action will reassure investors that there is no systemic decline and the situation is reversible.

"There are differences within Congress, within the Cabinet, within the coalition and between the ruling party and government. This has resulted in complete policy paralysis, which is evident in every field of decision-making," he said. Javadekar said results about IIP, GDP, current account deficit, rising unemployment, fiscal deficit and interest rates are serious indicators as far as the health of the Indian economy is concerned.

Congress spokesperson Manish Tewari, however, said BJP had not read the report in full and insisted that the fundamentals of the Indian economy were strong. He said the same report stated that the economy recorded a growth rate of 8.8% between 2004 and 2008 and 7.8% between 2009 and 2011. The Indian economy, when compared with the rest of the world, did better.

On the alleged disconnect between Congress and the PM, he said, "such an observation betrays poor appreciation of the Indian democratic system and governance processes. The report states that economy grew at 8.8% from 2004 to 2008 and at 7.8% from 2009 and 2011. During this entire period, wasn't Sonia Gandhi UPA chairperson or Manmohan Singh the prime minister? Why did this disconnect not manifest then?

Some people have the habit of raising ghosts and then slaying them." He said there has been a general slowdown across the world. "But to extrapolate and say that this is due to political disconnect is completely erroneous and shows a lack of understanding of Indian democratic processes and governance," he said.