Mocking at government's elation over the sovereign rating upgrade by Moody's, ex-finance minister P Chidambaram on Saturday said only a few months ago the regime had flayed the rating methodology.
"Just some months ago, government had said the Moody's methodology was all wrong... A long letter was written by Shaktikanta Das (ex-economic affairs secretary) questioning Moody's ratings methodology, saying they've to revise their methodology as it's all wonky," he told the Tata Literature Live in Mumbai.
Moody's had on Friday upgraded the sovereign ratings by a notch to Baa2 with stable outlook, citing the Modi government's various reform programme and higher growth prospectus. The last rating upgrade was in 2004.
Ridiculing the way government has reacted to the upward rating revision, the senior Congress leader recalled that for the government "Moody's, whose methodology was all wrong circa 2016".
On higher growth, w hich was cited by the agency as one of the key reasons for the rating action, he said the same agency and government project growth at 6.7 per cent for the current financial year.
"It was 8 per cent in 2015-16, 7.1 per cent in 2016-17 and will be 6.7 per cent in 2017-18. Is that north or south, you conclude," he said.
According to him, there are three key indicators -- gross fixed capital formation and within that private sector investment; credit growth, especially for small businesses, and jobs -- which are critical to assess the health of an economy.
"But the dashboard is flashing red on all these three indicators," he lamented.
Reeling out numbers, Chidambaram said gross fixed capital formation is down 7-8 points from its peak and there's no sign of it recovering in the near future as well.
Further, he said private investment is at its lowest in the past seven-eight years. In addition, several projects are stalled on one hand and may companies are on the other being referred to the Insolvency & Bankruptcy Code. All these would lead to closures and downsizing and loss of jobs.
Secondly, the former finance minister pointed out that credit growth has been the lowest in two decades. "It has crept up 6 per cent year-on-year, but for medium industries it has been negative credit growth...SMEs are struggling and have to find finances outside the formal lending system."
He also referred to the criticality of job creation saying, "government is unwilling to come up with reliable and authentic data...CMIE (Centre for Monitoring Indian Economy), which is a quite credible agency, stated that between January and June 2017, as many as 19,60,000 jobs were lost."
The senior Congress leader also said over 90 per cent of jobs are in the SME sector which requires an urgent push to boost the economy.
Economy is not out of wood despite rating upgrade: Manmohan
The National Democratic Alliance government should not be "lured into false belief" that the economy is out of the wood, former prime minister Manmohan Singh said on Saturday, reacting to the Moody's upgradation of India's sovereign credit rating.
"I am glad that Moody's has done what they have done but we must not be, I think, lured into false belief that we are out of the wood," he said, reacting to a query on Moody's rating in Kochi.
The economy needed strong purposeful guidance to move forward at the rate which the government itself says they want the country to move eight to 10 per cent, Singh said on the sidelines of a national seminar on 'Macro Economic Developments in India: Policy Perspectives' organised by the Economics Department of St Teresa's College, Ernakulam.
His comments came in the wake of Finance Minister Arun Jaitley terming the Moody's upgrading India's sovereign rating after 13 years as "belated recognition" of reforms undertaken.
Singh also cautioned that the soaring prices of the crude oil could "hurt the fiscal system" of the country.
"Now the crude oil prices are USD 62-64 whereas few months ago, they were about 40-45. So it can hurt balance of payment. It can also hurt the fiscal system as well," Singh said.
Asked how different he would have implemented the GST, Singh said there was "undue haste" in implementing the new taxation system and blamed the bureaucracy for its lack of preparedness.
"Both in administration and implementation, I think there is much to be desired and the very fact that the council has met so many times, they have now reduced rates of 211 items."
That showed that there was undue haste in implementation and the bureaucracy had not done its homework, he said.