984 Who gave horns and fangs to International Credit Rating Agencies?

Bulls, deer etc. have horns on their heads for self-defence. Dogs, Wolfs etc. have fangs to split steaks they eat. But International Credit Rating Agencies which are four or five in number, seem to have horns to intimidate developing and under-developed countries, and fangs to feed on timid countries. Who gave them these horns and fangs? Not the Affluent Nations like U.S.A., U.K., France, Germany, Japan, China. But, developing and underdeveloped, poor countries like India. Why did they give? For mobilising foreign investments from Foreign Portfolio Investors (FPIs), Foreign Institutional Investors (FIIs), Foreign Individual Investors, Foreign Governments, Foreign Banks, Foreign Investment Agencies, Merchant Bankers, some of whom seem to attach great values to the Ratings given by these International Rating Agencies. But how many of those FPIs, FIIs, Foreign Governments care to check whether the Ratings made by the International Rating Agencies are accurate, and are not based on whims and fancies of the Directors/Managers of the Rating Agencies? If such checking had been done, the 2008 World Recession, following the Sub-prime Lending Crises in American Banks and the Wall Street Investment Empires such as Goldman Sache would not have taken place. Ratings obtained from International Rating Agencies, might have helped the Investment Decision-makers from embarrassment-s and loss of fat jobs, which might have enabled such decision-makers to hide under the not-too-reliable expertise of the Rating Agencies.

Criticism of Rating Agencies, by Mr. Arvind Subramanian, the Chief Economic Adviser of India

CEA's Criticism	yb-a-donkey's view
Rating Agencies have not upgraded India "despite clear improvements in our economic fundamentals" which include inflation, growth, and current account performance. Despite its rapid growth, India still has a BBB rating. China's rating has been upgraded to AA, despite its slowing growth and rising debts.	India is a Sovereign Nation. It has vast human and natural resources. It can produce any goods and services on a massive scale for exports. The export profits can be used as 'fresh investments' for setting up new export-oriented businesses, both manufacturing, and service businesses. India can also use Keynesian Investment Multiplier, by pump-priming (introducing newly created Central Bank's moneys into productive, export-oriented ventures. It can also buy required technologies. Where is the need for canvassing for Foreign Portfolio Investments, and Foreign Institutional Investments. Mr. Manmohan Singh, the Former Prime Minister of India, and the intermittant Vajpayee Government might have committed an error of judgement, or forced by circumstances, to invite foreign investments. But, the new 2014 NDA Government, there is no such compulsion. Why are we continuously begging for Foreign Investments? Have we fallen in a Foreign Investment trap? (similar to Foreign Debt Trap).
"Given this record, what we call Poor Standards, my question is - why do we take these rating analysts seriously at all?"	Instead of asking the question himself, CEA ought to have tried to answer the question. Another important observation which can be made is: Even IN SPITE OF / NOTWITHSTANDING low/mediocre ratings given by Fitch, Moodys, and Standard & Poor, India could mobilise considerable foreign investments. Hence, we should stop hankering about the Ratings given by the International Agencies. We can ignore them. If we have been paying them some subscriptions, we should stop. If we have been paying some commissions to Lobbyists in U.S.A., and Europe, we should stop.
They consistently fail to provide advance warnings of financial crisis and downgrade a country after the fact. In the US, they had given AAA ratings to mortgage-ridden securities, which later dragged down the economy and created a crisis.	Have we understood this harsh truth, too late?

Related news link

Click here to go to http://www.ndtv.com/india-news/chief-economic-advisor-arvind-subramanian-slams-rating-agencies-for-not-upgrading-india-1692288. A few quotes from this news report:

India has been consistently pushing for better ratings, which is expected to act as an endorsement to Prime Minister Narendra Modi's economic policies and help bring in much-needed investment. Since coming to power in 2014, the NDA government has aggressively chased investment - taking measures to streamline processes and bring down inflation.

But the three key ratings agencies --- Moody's, Standard & Poor's and Fitch - have not upgraded India, contending that the government needs to do more. In November, Moody's refused to upgrade India, said the economic initiatives of PM Modi's government are yet to produce results.

Among the issues the rating agencies have red-flagged are India's high debt-GDP ratio and bad assets of its banks. The agencies argue that the debt-GDP ratio, at 69%, is on the higher side and acts as a deterrent to private investment.

Personal views of ybrao-a-donkey, not intended to be imposed on others

Why should India have been consistently pushing for better ratings?
Why do Prime Minister of India's Economic Policies, need an endorsement from Foreign Rating Agencies?
Why should India aggressively chase foreign investments? We can chase domestic investments?

Is money-laundering of $100 million so easy?

Domestic Fund Flows may be moving abroad through Money Laundering Channels, and coming back to India as Foreign Investments from Hong kong, Singapore, China, Mauritius, etc. etc. If we can prevent outward flight of domestic funds, by plugging loop holes in our Foreign OUtward Remittance Systems, our Imports-payment systems, Export-Realisation Systems, there will be no need for us to beg for foreign investments.

One latest 2017 May example: A sum of Rs.6 billion (nearly $100 million) was remitted by a criminal business man in Visakhapatnam to Hong Kong, Singapore, China, ostensibly for import of software. The criminals are reported to have promoted about 30 shell Companies, opened accounts in various banks in Visakhapatnam, received funds from Kolkata collaborators, and remitted them to Hong Kong, Singapore, China, on the pretext of software imports. How easily and swiftly they could do ? Now those $100 million may be coming back to us as Foreign Portfolio / Institutional Investments.

Besides, we have to study why Indian domestic fund owners are hesitating to investment their funds in India directly, without sending them through the Money Laundering Route.

Who are these Moody's, S&P, and Fitch to prod and push India saying that "Government needs to do more". We need not do more. Who are they to say that our initiatives are not producing results?

If at all our Debt/GDP Ratio, bad assets of our banks are REALLY HIGH, that should be our headache. It is our duty to attend to them. Others need not PUSH us.

To come back and continue adding / deleting / modifying. सशेष. ఇంకా ఉంది.

982 The words of our Rulers cannot / may not have to be taken literally. If anybody takes them literally, they may be cold-shouldered without being told that they are being sidelined, and of course, reasons will not be informed.

In my mother tongue- Telugu language spoken by 100 million people across the world, there is an adage "ADu vAri mATalakU arthAlu vErulE. avunanTE kAdanilE. kAdanTE avunanilE. Approx. Engl: The meanings for the words of Ladies will be different from their apparent tenor. If they say 'yes' it means 'no'. If they say 'no' it means yes. In this adage, there is no gender bias. The maxim arose from murmurs of love, and are not intended for serious consumption. This adage was also used very effectively as a song in the Telugu film of 1950s, 'missamma'. That song I shall give at the bottom with its approx. English meaning. The purpose of quoting the proverb, and the film song of 'missamma' is to extend the depth and purport of its meaning to Public Administration, and Politics. We can have a new adage "pAlakula mATalaku arthAlE vErulE. approx. Engl. The meanings of the words of the Rulers will be difference from their face value. Appearances can be deceptive.

Context:V.K.R.V. Rao Memorial Lecture at Bengaluru. Relevant links

Click here to go to http://economictimes.indiatimes.com/news/economy/policy/speak-your-mind-dont-just-endorse-official-lines-chief-economic-advisor-arvind-subramanian-to-experts/articleshow/58631014.cms. Subj: His perceived Experts' bluff for "falling over backwards" to justify an official decision, which denies the government high-quality inputs, saying they should be consistent in giving feedback towards policymaking.

What Mr. Arvind Subramanian, India's Chief Economic Adviser, is reported to have said:

What CEA said	yb-donkey
"...On the domestic side, there is a clear relationship between expert analysis and official decisions. Before policy decisions, the expert analysis is often illuminating. But once the decisions are taken, it is truly striking how the tune and tone of the analysis change. Analysts fall over backwards to rationalise the official decision ..."	Post demonetization, only two Economists are left in INdia. 1. Hon. Prime Minister. 2. Hon. Finance Minister. Others are virtually intruders, or 'unwelcome guests'.
"...Yet, instead of criticising the official decisions, as consistency would demand, analysts found ex-post logic to attribute merit to these decisions. That is, far from criticising the central bank for holding rates constant over the past three announcements, analysts praised the policy stance as prudent and helpful in boosting the credibility of the inflation-targeting framework ..."	Our CEA seems to have clearly understood the expectations of our Hon. PM & FM., who want the Experts to criticize RBI. The CEA is trying to 'drill' that message into the minds of the 'Experts', who have already apparently understood the message, and are trying to re-sculpture and re-tune themselves.
"... My claim is that experts often hold back their objective assessment. Instead, they censor themselves, and in public fora are insufficiently critical and independent of officialdom, whether the officials are in Mumbai or Delhi. To the extent they offer criticism, it is watered down to the point of being unidentifiable as criticism ..."	Survival Method. Rex Non Potest Peccare. The king can do no wrong.
"...If you ask them, they would say they are just trying to be 'constructive'. But I feel something else is at work. For a variety of reasons, experts feel the need to stay on the right side of power -- whether the RBI or the government..."	Else, they may be blacklisted. They may be branded as Progress-Blockers.
"...before policy decisions are made, observers tend to express their views that they think officials are likely to take on board. After policy actions, they try hard to endorse the decisions already taken. ..."	Experts may try to predict what the Industrialists/Corporates want, as the policy from Govt., as our PM & FM assure and promise to the Industrialists/Corporates everything they want on a golden platter. But sometimes, their hands may be tied from extraneous factors such as welfare of people, in the context of elections, or court decisions.
"...As a result, we in the government do not really benefit from their wisdom. This is a serious problem, because high-quality policy-making demands high quality inputs and high quality debates..."	Policy is not made by Expert Opinions. Policy is made in the mind of PM alone, and sometimes, in the dual minds of PM & FM.
"...The paradox is that in other spheres -- such as trade policy or development policy -- one sees a more vibrant, healthy, and unself-censored debate. Why is there such little debate about macro policy? I would venture three explanations..."	Even in other spheres re-sculpting and re-tuning is taking place. Rex Non Potest Peccare. King can do no wrong.
"...Bankers are careful not to get on the wrong side of the government or the RBI, because they worry about losing access and because they are regulated by them.	Survival Need.
"...It is difficult to get a man to understand something when his salary depends upon his not understanding it. ..." (Quoting writer Upton Sinclair).	Who has to change? Rulers? or the Paid-Experts? CEA knows.
"...Bottomline from this analysis is inflation pressures are easing considerably, the inflation target has been over-achieved, the inflation outlook is benign because of a number of economic developments. Real activity remains weak and well below potential, the exchange rate is appreciating, denting exports. ..."	"Inflation is under control" is a perception of the Rulers. Because, they do not go to streets to buy NECESSITIES. How Rulers get their needs? Somebody from sky may be SHOWERING THEIR CONSUMPTION OBJECTS on them.
"Against this background, most reasonable economists would say the economy needs all the macroeconomic policy support it can get: instead, both fiscal policy and monetary policy remain tight. And on top of that, there are some officials who even think that policy should get tighter,"	Commonman does not know all these intricacies. He-she knows only to suffer.
"Today, there are hundreds of economists outside the government and the RBI and several within. Instead of getting a hundred plus views, we get about ONE view, the official view. Even more interesting is that about 12 months ago, when inflation was much higher and growth was higher, there were economists who called for a large cut in interest rates. Yet today, they are silent,"	Sine cure jobs? May be. But, Rulers can design drills which are similar to military drills, police drills, to make them march in a more syncronized manner.
"So, in the short run, it will want to shape opinion in its favour. But in the long run, that is perhaps not desirable. Public interest is perhaps better served by richer debate that encompasses critical views, including of officialdom. Officials should signal that clearly,"	Is CEA telling to himself? Anyway, he cannot air these views before PM-FM duo.

ybdonkey's views are his personal views, not intended to spoil the minds of others

In Democracy, both at National level, and at Provincial levels, Cabinets are expected to discuss issues threadbare before decisions are taken, where dissenting views are welcomed and their pros-and-cons considered, irrespective of whether they are finally accepted by the Cabinets or not. Anyway, that custom died down in India.

A similar custom is expected in respect of 'Advisers' of all kinds. But it does not appear to germinate, because at Cabinet level itself, the custom of consultation has become defunct and extinct.

Can we expect Mr. Arvind Subramanian to reveal whether he was consulted about the pros-and-cons of demonetization, before the PM took the decision of 'demonetization', and if so what did he advise the PMO? This, he may not be able to reveal, because he might have been bound by some oath of secrecy.

In some respects, the role of Attorney General in the sphere of law, and the role of Chief Economic Adviser in the sphere of Economic Policy, are strikingly similar. Now, can Mr. Arvind Subramanian do some introspection? May be, he may be doing it silently. Or he may not be doing. Survival instinct.

To come back and continue adding / deleting / modifying. सशेष. ఇంకా ఉంది.

780 It may not be easy to rein in Mr. Subramanian Swamy, who has a tendency to speak out oblivious of consequences!

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This is in continuation of post No. 779, Click to go to 779 , which dealt with some of the utterances of Prof. Subramanian Swamy, 1988 Union Commerce and Law Minister in Chandrasekhar's Cabinet, and 2016 Rajya Sabha M.P. Mr. Swamy used to comment heavily against Ms. Sonia Gandhi and Mr. Rahul Gandhi. Then, those comments did not appear INAPPROPRIATE to BJP. It appears as though Mr. Subramanian Swamy is turning his guns against everybody- including Mr. Raghuram Rajan, RBI Governor, Mr. Arvind Subramanian, Chief Financial Advisor to GOI, Mr. Arun Jaitley, Union Finance Minister, NOW . But it is not fully correct. Mr. Swamy was critical of BJP and Mr. Modi's Government earlier too. (See his quote below). Now, our hon. Prime Minister of India seems to have shed his reticence, and termed the utterances of Mr. Swamy, as INAPPROPRIATE, that FONDNESS FOR PUBLICITY is NEVER GOING TO DO ANY GOOD TO THE NATION, that PEOPLE SHOULD CONDUCT THEMSELVES WITH UTMOST RESPONSIBILITY, and that IF ANYBODY CONSIDERS HIMSELF ABOVE THE SYSTEM, IT IS WRONG.

Whether it is in my party or not, still I think such things are inappropriate. This fondness for publicity is never going to do any good to the nation. People should conduct themselves with utmost responsibility. If anybody considers himself above the system, it is wrong. --Mr. Narendra Modi.

I ask the media not to make a hero out of people making communal remarks.--Mr. Narendra Modi.

For those who wish to study the relative news report here is a livemint.com link: Click here to go to study Livemint.com news report.

ybrao-a-donkey's humble comments. वैबीराव एक गधे के विनम्र राय . వైబీరావ్ గాడిద వినమ్ర వాణి. You have every right to differ with me. I respect your right. आपको मेरे मत से भिन्न राय रखने के संपूर्ण हक है। मै उस अधिकार को परिपूर्ण रूप से गौरव देता हुँ. మీకు, మీ భిన్నమైన అభిప్రాయాన్ని కలిగిఉండే సంపూర్ణ హక్కు ఉంది. దానిని ఎంతో నేను గౌరవిస్తాను. However, pl. examine this donkey's views also. परन्तु एस गधे के दृष्टिकोण को भी अनुशीलन कीजिये. కానీ ఈ గాడిద దృష్టికోణాన్ని కూడ ఓర చూపుతో కంటజూడుమీ, క్రీగంట జూడమీ.

This is not the first time, that Mr. Subramanian Swamy is making comments against the BJP and NDA, its Ministers, (apart from bourgeoisie economists of his own tribe). Here is a quote from oneindia.com news report Click here to go to Oneindia.com report dated 10th April 2015, and study Mr. Subramanian Swamy's sayings, when he cautioned the Modi Government that he will initiate a PLI in Court, if the Govt. does not reexamine the Rafael Fighter Jet Deal with France. .

"There are two major issues with the Rafale Aircraft deal which would embarrass the BJP government. The first is that Rafale is less fuel efficient aircraft and lacking in essential performance characteristic that no country in the world has agreed to buy these aircraft. ..."

If the Prime Minister for some other 'compulsion' decides to go ahead with the deal, I will have no option but to approach the court in PIL to get it set aside.

"...It is a fact that Dassault will go bankrupt if no country buys the Rafale and we want to oblige the French goodwill, it is better to buy Dassault itself rather than their planes as it will be more beneficial ..."

As at the end of May 2016, the deal still seems to be pending. It is not clear whether Mr. Swamy's threat had any impact on the Govt.'s decision, and slowed it down.Click to study hindustantimes.com/business/ready-to-conclude-rafale-deal-ball-in-india-s-court-dassault-aviation .

Govt. nominated Mr. Swamy to Rajya Sabha in 2016, under "Persons of Excellence category". When compared to nomination of film stars and cricketers to Rajya Sabha, the Nomination of Mr. Swamy, an eminent bourgeoisie economist and Senior Minister, is definitely better. Besides, he is a person who does not keep "mum" in the Parliament, and like the film stars and cricketers he will not raise issues like constructing a flyover before one's own house, and try to alter its course.

It is not clear whether Mr. Subramanian Swamy initiated his PIL intended by him above. I am unable to trace any news reports. Did he change his mind after his Nomination to Rajya Sabha in 2016?

Question: In view of persistent fears of invasions from China and Pakistan, India cannot afford to continuously and indefinitely postpone purchase of fighter aircraft, guns, frigates, submarines, aircraft carriers, radars, weapons etc. etc. We cannot afford to be complacent because we want to appear to Messrs. CLEAN, and procrastinate our purchases and weaken our Defence Forces. How this problem can be tackled?

Ans: Every Tom Dick and Harry cannot make fighter aircraft, guns, frigates, submarines, aircraft carriers, radars, weapons etc. Such manufacturing requires large investments, technology, some supervision by Governments of the respective countries.

If five manufacturers of fighter jets have offered to supply them to India, and if India needs 36 fighter planes, India can give orders for 2 or 3 jets from each supplier, as immediate supply. On receipt of the jets, our field level Defence Forces can study them about their utility, under trying conditions of Siachen, Ladakh, Arunachal Pradesh. Our DRDO establishments and HAL can be asked to break them down and study their technology. Further purchases can be made on the basis of their practical utility. It will always be better to maintain supply channels with all the five manufacturers to get spares, training etc. At the same time, India should try to develop its own fighter planes as a long term strategy of self-reliance. What ISRO has done and proven, DRDO and HAL can also do and prove.

Mr. Subramanian Swamy has good relations with Swamijis (Hindu Monks) and Temple Heads. He can be a potential rival to Mr. Narendra Modi for Prime Ministership, if for any reason, RSS finds that Mr. Modi is "too secular". Born 1939, at 77 years of age, age is one negative factor for Mr. Swamy. Besides, he does not seem to be much comfortable with Hindi.

To continue. सशेष. ఇంకా ఉంది.