In an unprecedented broadside at the UPA-II government’s style of functioning, global rating agency Standard and Poor’s (S&P) on Monday pointed to the operational roles of Congress president Sonia Gandhi and “unelected” Manmohan Singh as Prime Minister for the current economic impasse and threatened to downgrade India’s sovereign credit rating to ‘speculative’ from the lowest notch of ‘investment’ grade.
In its report, ‘Will India be the first BRIC fallen angel,’ S&P said: “Slowing GDP growth and political roadblocks to economic policy-making could put India at the risk of losing its investment grade rating” and pointed out that the crux of the current political problem in going forward with economic liberalisation was the nature of leadership within the Central government and not “obstreperous” allies or an “unhelpful” Opposition.
Having scaled down India’s rating outlook to ‘negative’ from ‘stable’ in April this year, the S&P report, authored by its credit analyst Joydeep Mukerji, highlighted that the Congress was divided on economic policies, and there was substantial opposition to any serious liberalisation. It pointed to the division of roles between a politically “powerful” Congress president and an “appointed” Prime Minister as having “weakened the framework for making policy, in our view.”
“Moreover, paramount political power rests with the leader of the Congress, 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,” it said.