[Once again, I apologize for a non Cyber Law Post prompted by the unprofessional views expressed by Moody’s which needs countering. Ignore if you want….Naavi]
Press Reports suggest that the International Credit Rating Agency Moody’s has warned that Narendra Modi needs to rein in members of the Hindu fringe elements or risk losing credibility.
Moody’s is a credit rating agency and has the expertise to comment on the financial aspects of the country. It is customary to consider that the economy of the country is affected by several factors one of which is the political environment. Hence “Country Risk” and “Political Risk” is often used as elements of analysis in a Credit Rating exercise.
However, a prudent Credit Rating agency assigns appropriate weightages to different aspects that affect the economy and obviously the facts such as that it is natural in a Democratic country for opposition to keep rattling has to be taken into consideration before factoring in impact of such opposition antics into its rating.
According to the ET report, Moody’s are reported to have “Advised” PM Narendra Modi that
“Modi must keep his members in check or risk losing domestic and global credibility,”.
The report goes on to comment on the ongoing Bihar elections and says
“The BJP is not the incumbent (in Bihar), so a win here would help secure an upper house majority… Overall, it is unclear whether India can deliver the promised reforms and hit its growth potential. Undoubtedly, numerous political outcomes will dictate the extent of success,”
There is no doubt that the report is a scathing attack on the Modi’s Government and predicts that the GDP growth rate would be around 7.4% to 7.6% for the full fiscal year 2015-2016 as against a potential of around 9.3%.
In a way the report has placed a value on the disruptionist impact of the opposition as around 2% of GDP.
However, instead of restricting itself to providing its views, the report actually becomes a political commentary set to help the opposition in the Bihar elections. Now, politicians like Lalu Prasad Yadav who may not know the difference between Modi and Moody will start quoting the agency in their election speeches.
It must however be emphasized that in our view,
“While a Credit Rating agency has the right to make its observations, it is unacceptable to word its observations in the form of an “Advice” to the country’s Chief executive.
Lifting the Corporate Veil
The report has to be read along with the credibility of the agency which has lent its name. Since it comes from Moody’s, it is being read and commented. But at the same time, we all know that any such report is a product of some individual’s efforts and ultimately the credibility of the report has to be tested against the credibility of the person who puts out the report. We therefore need to look beyond the name of Moody’s and lift the corporate veil.
This report is attributed to Faraz Syed, associate economist at Moody’s Analytics and raises a question on the credibility of the analyst as well as Moody’s as a Credit Rating Agency.
At the outset, I would like to categorically state that my comments should be disassociated from the fact that the name of the analyst may lead to certain inferences. I am only analyzing the issue from other factors.
Mr Faraz Syed is based in Sydney and is in the process of completing his Master’s degree in Economics. He completed his Bachelor’s degree in 2013 from MACQUAIRE Universtity, in Australia. His interest initially has been in the field of Cricket and entered the career as an Economist in January 2013. After working for one year with the Australian Bureau of Agricultural and Resource Economics and Sciences, he joined Moody’s in December 2014 as Associate Economist.
His experience as an analyst in Moody’s is therefore less than an year. I suspect that he has never visited India and his knowledge of India may be through Cricketers and IPL.
His attempt to convert a Financial Analytical report into a political advisory to a Head of State shows his immaturity as an analyst and nothing else.
However, one cannot appreciate how Moody’s let the report to be published under its name and that indicates that there is no control or supervision over the work of an “Associate Economist”.
What this States of the Opposition
While the opposition parties and the so called intellectuals who are spearheading the AwardWapsi movement would rejoice at the endorsement they have received from Mr Syed Faraz, I must point out the other dimension of the report.
What Mr Syed Faraz says is that the potential of 9.3% growth in GDP has been reduced to around 7.4% because Mr Modi has an opposition in Rajya Sabha and cannot pass progressive legislation. This confirms that the disruptionist activities of the opposition are harming the progress of the nation.
In other words, Mr Syed Faraz and the Moody’s are confirming that the actions of the opposition are “Anti National”.
Having been involved in the Financial Services industry for a long time in the beginning of my career and observed the birth and growth of Credit Rating agencies in India such as CRISIL and ICRA, I consider that India is in a path to progress with economic reforms which need time to yield results. Professionals in credit rating agencies need to understand that we cannot set up power plants in one year and without adequate power, industries cannot take off, and without industries taking off, there cannot be employment etc.. All this takes time and a professional in a credit rating agency should be aware.
The Dadri incident or Kalburgi incident has no relevance in the long term economic building of the country. It is only the anti national forces who would like to fish in troubled waters when such incidents happen and if a professional lets himself to be drawn into using those incidents to blame the PM, he stops being a professional. I consider Syed Faraz has betrayed his incapability of filling the boots of an “Economist”. If he gets to be a “Master in Economics” because of his erudite discourse on India, it would reflect the standards of the University that grants him the degree.
Though political commentators in their Bihar election mood may say whatever they feel like, professional organizations such as Moody’s should have shown maturity in passing comments as have been passed in the report and this actually undermines the credibility of Moody’s as a credit rating agency.
I would like to call upon the Moody’s as an organization to disown the advisory, withdraw the report and publish a corrected version without the politicized comments of Syed Faraz.
I will be forwarding a copy of this article to appropriate persons in Moody’s and also request readers to send it to appropriate contacts in Moody’s if they are able to reach out.