<div><em><strong>India stands tall amidst slowing global economic powers, writes Sumit Sharma</strong></em></div><div> </div><div>Review by a rating agency is an event most Babus at the North Block like to underplay yet they go all the way to roll out red carpet and make detailed presentations. Even as importance of rating agencies is disputed, governments and more so the politicians like to flaunt around any rating upgrade as yet another feather in their cap and a milestone of the government's success.</div><div> </div><div><div>Visit of Standard & Poor's officials to review its credit rating comes at a crucial time. Narendra Modi is scheduled to visit the UN General Assembly in New York in less than a month. For a Prime Minister who's already led whirlwind tours to more than a dozen developed countries in less than 15 months, any upgrade will come in handy to woo foreign investment to help India's investment starved economy. This time Modi plans to repeat his magic on the western coast and Silicon Valley.</div><div> </div><div>India stands tall amidst slowing global economic powers. Still, authorities may not be as confident and aggressive about their achievements and the country's unique position.</div><div> </div><div>On the positives, India could be the fastest growing major economy as China slows, Europe stumbles, Japan stutters, Brazil slips in to a recession, other BRIICS nations battle ill-effects of falling commodity prices, and the US reconfirms the steadiness of its growth. </div><div> </div><div>India has several positives to flaunt, which could give it reason to seek improvement in its rating. Most critically retail inflation has firmly slowed, giving the central bank sufficient room to further lower interest rates, and for the nation to confidently attract overseas investors. A plunge in commodities and crude oil prices and some cuts in subsidies has helped the government rein in fiscal deficit. Then, the government's commitment to route more investments to build infrastructure will be an added positive.</div><div> </div><div>India has narrowed its current account deficit at 1.3 per cent of the Gross Domestic Product (GDP) for the year ended March 2015, giving external sector solidity. The country's foreign exchange reserves are at a steady $380 billion and the rupee is among some of the best performing currencies, even as other BRIICS currencies slide. </div><div> </div><div>Yet, despite being the fastest growing major economy, India too faces a slowdown in its economy. Exports have declined five months of six. Industrial growth is yet to pick up and is still struggling below 4 per cent. Agriculture faces an uncertain year as monsoon remains weak, uncertain and scattered. Any dip in rural income could have a telling impact on already slow sales of companies. </div><div> </div><div>Demand from consumers and producers alike remain weak and growth in bank credit is at the slowest in two decades. HSBC Purchasing Managers' Index (PMI) for the past few months has just about kept its nose above water. Business Confidence is at the lowest in four quarters. Bad loans of banks remain at an elevated level and the government was almost compelled to capitalize banks with an amount much larger than budgeted.</div><div> </div><div>Government ministers are fretting at their lack of success in getting the parliament to approve two key bills. The Goods Service Tax (GST), which is touted to have a potential to improve GDP by as much as 2 percentage points, is stuck in tit-for-tat disruption of the parliament. Any delay in its approval could mean it will not be implemented by the beginning of next financial year. <br> </div><div>The other, less contentious land acquisition bill will have to go back to the Standing Committee which will dilute it, much to the chagrin of industry and businessmen who were expecting the Modi government to incorporate their concerns. <br> </div><div>Moody's Investor Services has already trimmed its forecast for India's growth to 7 per cent for the year to March 2016, from earlier prediction of 7.5 per cent. The government expects GDP higher than 8 per cent. <br> </div><div>What could one expect from S&P - outlook upgrade or a reminder that Indian government has much more to do?</div></div>
