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Mainstream, VOL LVIII No 25, New Delhi, June 6, 2020

A Tale of Two Credit Agencies! | L. K. Sharma

Saturday 6 June 2020

by L. K. Sharma

Moody’s “spoils Modi’s historic day”, a daily screams. Moody’s pricks the Modi government’s balloon by downgrading India’s foreign currency and local currency long-term issuer ratings from Baa2 to Baa3 — the lowest rung in its investment-grade rating system. It points to “the risks of a sustained period of relatively low growth, significant deterioration in the general government fiscal position and stress in the financial sector.”

The report did not plunge India into gloom and doom because Indians give equal opportunity to facts and fiction. They trust and love the rival credit agency called Modi’s that issues glowing reports on Indian economy every now and then. Modi’s depends on alternative statistics manufactured to enhance the feel-good factor. Moreover, Modi’s reports are also released in the audio format for the benefit of those who cannot read.

Modi’s credit agency is trusted by millions of political activists who see India evolving into a golden bird after the next parliamentary elections. On the other side, Moody’s audience is restricted to experts who examine fine print in English. Moody’s expert analysis is keenly awaited by business leaders who have started feeling uneasy about economy. Every such report increases their gloom. They are feeling let down because Modi’s government is founded on the rock of the business community’s faith in him.

Moody’s should have had a loving relationship with Modi who came to power with the help of the agency’s billionaire friends. And it is based in the US whose President is Modi’s closest friend. Perhaps it suffers from professional integrity and does not let Trump stop it from calling spade a spade. Or it does not see India becoming an economic superpower in the next couple of years.

The BJP’s IT Cell is surely cursing and saying you too Moody’s! The BJP’s reaction does not shake the confidence of Moody’s. It cannot be harmed by the Hollywood Hindus angered by its silence on Modi’s “economic miracle” as seen by them. The influential credit agency is not an isolated American intellectual vulnerable to a hostile social media campaign and a boycott of his new book criticising Modi’s India.

Since coming to power, Modi managed to impress many American business leaders and institutions. Moody’s seems to have remained uncharmed. Even in 2015, paying no heed to Modi’s claims, Moody’s Analytics issued an adverse investment risks research report. The agency had then the temerity to suggest that the Indian Prime Minister should rein in his party members in order to curb “ethnic tensions”.

That was in 2015 when India’s then finance minister was busy fighting the dissenting writers, artists, scientists, historians, sociologists and filmmakers. Moody’s Analytics warned Prime Minister Modi against losing domestic and international credibility. It noted the “belligerent provocation of various minorities” in India. It had perhaps read the daily reports of the sectarian clashes and rising intolerance.

Moody’s does not produce lasting literature but generates words that shake or thrill the political and business leaders around the world. A Prime Minister courting international investors can hardly ignore Moody’s Analytics. However, an agency talking of tolerance was talking to the deaf in India.

The agency was not flooded with hate mail for manufacturing dissent and interfering in India’s internal affairs. No screaming TV anchor shouted that Moody’s Analytics is doing politics through other means. Or that it was encouraging an international foundation to release data on the nutrition value of beef or an Indian NGO to organise a wake for the death of diversity. That was because not many voters know what Moody’s is. Its advice did not halt the “Project Polarisation” that went into the top gear during successive election campaigns, widening sectarian divisions.

Prime Minister Modi has never been short of unsolicited advice on maintaining India’s pluralistic traditions. Some plead with him on the moral grounds and some others on practical considerations. This has been so since he assumed office in New Delhi. Even his dearest friend Obama delivered a sermon on religious tolerance as soon as he freed himself from Modi’s brotherly embrace. A stinging editorial in The New York Times followed. By a coincidence, there was a sudden stoppage of the attacks on the Christian churches and the re-conversion of Christians as part of the Ghar Wapsi movement.

But that limited positive move did not stop the politically empowered fringe groups from spreading sectarian hatred. Many violent incidents including murders resulted from their insistence that the people should read, write, speak, wear and eat only what they permit.

Soon a stage reached when the writers could take it no longer and started expressing their dissent. They and many leading scientists, artists, filmmakers and academics issued statements and returned their awards in protest. They faced ferocious verbal attacks by the BJP and RSS leaders. They were blamed for manufacturing dissent and playing politics. For lacking integrity and remaining silent during the earlier tragic events.

Any activist running an NGO was told that he was protesting only because the present government stopped foreign funding of several NGOs. The TV studios and social media became the battlegrounds for an unprecedented cultural war. The then President of India found it necessary on four occasions to refer to India’s civilisational values including pluralism. He too invited trenchant criticism for his remarks.

This war of words was going on when Moody’s joined the fray in 2015. The battleground shifted from cultural to economic. The then RBI Governor highlighted the link between economic growth and virtues such as tolerance, free debate and mutual respect. In a convocation address that raised eyebrows in the ruling party, Raghuram Rajan said a quick resort to bans will chill all debate as everyone will be anguished by the ideas that they dislike. It is far better to improve the environment for ideas through tolerance and mutual respect, he said. He wanted alternatives ideas and the right to behave differently protected as long as it does not seriously hurt others.

Thanks to the 2015 report by Moody’s, the debate about the rising intolerance spilled over into another domain. For the first time a business leader, Infosys founder N R Narayanamurthy, spoke up on the issue of the minorities living in fear. He was the first prominent businessman to raise his voice against the atmosphere of religious intolerance. He expressed his concern about the growing resentment of the people belonging to different religions and regions. Perhaps he saw no point in invoking the moral imperative and so he said that no economic progress can be achieved if the current situation continues.

Subsequently, Naryanamurthy fell silent. But it was noted widely then because Indian business leaders generally maintain a studied silence in such situations. They fear the politics of revenge and being deprived of the benefits from the politics of rewards. Only a couple of business leaders dared to condemn the large-scale violence in Gujarat when Modi was the chief minister. Most of them felt it was not their business to speak on the tragedy. Modi won admiration from business leaders for his pro-business policies and ability to attract investments.

Businessmen know how to behave with the government of the day. In Iran, during the revolt against the monarch, the bazarias showed Shah-friendly conduct. The German business leaders; role during Hitler’s time has been well documented. Some researchers say their financial support was not to the extent assessed earlier and that many of them were buying an insurance policy for themselves. Hitler had promised the end of all strife by creating a nation of a pure breed after eliminating the impure other.

Most Indian business leaders forget that economic progress requires social harmony and a nation at peace with itself. The establishment of the London Stock Exchange contributed a lot to the end of the religious strife in Britain, historians have recorded. The business acumen of the Gujaratis till the sixties contributed to social harmony.

In Gujarat, the businessmen of an earlier era ignored distinctions of class and religion. Their leaders demonstrated model employer-employee relations, took part in conflict management and helped in times of a crisis. They were respected and were listened to by all sections. That ethos vanished with the rise of religious fundamentalism promoted by political formations. Still the Gujarati business leaders’ indifference to the communal killings came as a surprise.

In the battle for power in Delhi, Modi appeared as a coming Messiah and a powerful orator. The people wanted a change. Once the big business saw which way the electoral wind was blowing, it found it safe to support Modi’s election campaign in a big way. It felt mesmerised by Modi’s dynamism as an administrator and his generous offers of incentives.

Indian business leaders lack a long-term vision and are thrilled by the promise of short-term gains. They paid no heed to the signs of coming confrontation and strife in Modi’s election campaigns in Gujarat and then in different parts of India — violent language and gestures and emotive issues. Perhaps they thought that Modi will keep the nation on a tight leash and protect them from labour unions, environmental laws, bureaucratic delays and corruption. So, they felt least bothered about Modi’s divisive politics or the provocative statements by his ministers and M.Ps. Social harmony was not their concern. The poll-eve propaganda to pitch one community against the other had no immediate impact on the share prices.

Thus, Narendra Modi as an aspirant for the post of the Prime Minister achieved the feat of yoking the antithetical forces of communalism and capitalism to race his chariot towards victory. This alliance has now come under strain. The strain will grow if the economy continues to falter as a result of the government’s policies. This is what has been pointed out by Moody’s. A few months ago, a prominent business leader Rahul Bajaj spoke out against the government.

The issue of economic development raised by the credit agency will be considered far more important than any campaign for free speech. A new brief will be given to the ruling BJP’s rapid response teams who denounce those talking of the dangers of the lynch mobs enjoying political patronage and of the “Hindutva’s holy terror”. They will try to feed some strange figures to the masses.

Moody’s has thus opened another battle front. This will involve economists, business leaders and financial institutions. No one in the government will ask how many battalions does Moody’s have. That question was relevant to the protesting writers. The sentiments of poets and painters can be trivialised. “Business sentiments” matter.

One has to observe the impact of Moody’s on Modi. The Prime Minister of India faces a fork in the road. Some commentators say that more the economy worsens, the greater will be his desperation to use the Hindutva pill to suppress the political side-effect of the economic failure.


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