(November 25/26, 2017)

Cover Story

Beyond External Ratings

This refers to your editorial “Rating the raters” (Business Standard, Weekend Ruminations, November 18). T N Ninan has done a brief, but an excellent summing up and analysis of the challenges external rating agencies pose, encapsulating many fallacies in the rating exercise usually ignored by media and analysts while celebrating an upgrade or lamenting about an unusual downgrade.
Enjoyed reading the comment on 'definition of corruption'. Strangely, what is ‘bribe’ in India is accounted legally as ‘promotional expenses’ or ‘discounts allowed’ in other countries and the corruption tag gets removed as the expenses become ‘legal'.
This applies to several parameters applied by rating agencies which parrot the feelings of their masters.
Just one more example:
This paper also has accepted ‘Debt to GDP Ratio’ is high in India. True. But, we forget that in the United States, Government Debt to GDP Ratio was 106.10 in 2016. You can argue, no comparison, where's India and where's US a 'developed' country! Then let’s go back:
The percentage of Debt to GDP in the United States averaged 61.14 from 1940 to 2016 (118.90 in 1946 and 31.70 in 1981).
US had a GDP figure @ US $18.57 trillion in 2016 which may cross $19 trillion next year. Ever wondered why US government should have a Public Debt figure at all? And where all the borrowed money goes? 
My personal view is that these figures should be filtered for unproductive ‘war expenses’ including the manufacture of war equipment beyond a minimum threshold level needed for defending the geographical boundaries before comparisons are made.
India needs a world-class rating agency of its own.
M G Warrier, Thiruvananthapuram

From newspapers

An unresolved issue**
The Union Cabinet has approved the revised salaries, gratuity, allowances and pension for the judges of the Supreme Court and high courts. In-service and retired judges will get arrears of revised pay and pension from January 1, 2016, the day from which the central government employees got the revision in their pay and pension based on the Seventh Central Pay Commission recommendations. The Cabinet also gave a green light to all 326 public sector undertakings to enter into wage negotiations with the recognised staff unions. Some of these undertakings have the practice of wage revision once in 10 years like the Government of India and some others once in five years, the like banking and insurance industries.
The government had advised the managements of financial institutions such as the Reserve Bank of India, LIC and Indian Banks’ Association (IBA) in June-July, 2016, to finalise the wage revisions due in 2017 without delay. Accordingly, the negotiations with some staff unions have already begun. This time around, it is hoped that the negotiating teams from staff will not settle and sign on the dotted lines until the managements agree to update of pension along with every wage revision and retrospectively from 1997, as has been the position with the working and retired employees of the central and many state governments. It is unfair that the pensioners and families of institutions such as the RBI and LIC, which are nationalised and in the public sector by some Acts of the Parliament, are being discriminated against by the successive governments. It is the right time that the leaders of the negotiating teams try their best find resolution to more than a two-decade-old problem. 
Ramanath Nakhate Mumbai
**Business Standard, November 24, 2017


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