The squabble over Moody’s Analytics and why the report matters
The squabble over Moody’s Analytics and why the report matters

The squabble over Moody’s Analytics and why the report matters

While government has dismissed some comments, Moodys says it stands by its assessment

The comments in a report titled 'India Outlook: Searching for Potential' by Moody's Analytics, continues to create controversy.

On Wednesday, the Prime Minister’s Office rejected comments in the report that asked the PM to rein in provocative, nationalist voices saying, “The opinion of a Junior Associate Economist employed with Moody’s Analytics has been splashed all across implying it as the opinion of Moody’s Analytics. The government notes with distress that the personal opinion of a junior analyst was passed off as a commentary on India by a Rating Agency by the media to buttress the narrative it wants to portray.”

But Moody’s Analytics has rebuffed the government’s claims and stood by its report. "The report was published by and is the view of Moody’s Analytics as part of its economic outlook series. The report included a section observing political developments in the context of their potential economic impact, and did not advocate any political agenda or perspective.”

Why is Moody's Analytics report important?

Moody's Analytics is the economic research and analysis division of Moody's Corporation and provides economic research on risk and performance of markets and economies worldwide, to international corporations, fund managers and banks.

What Moody's says or believes about a particular market or country's economy could have a significant impact on investor sentiments globally. To investors sitting in the US or Europe, far away from say India, organizations such as Moody's offer the much needed insight on the happenings of the country.

So, at a time when the Indian government is on a drive to bring in foreign investments, a negative report on India could severely hamper the government's efforts. 

Which portion of the report has irked the Indian government?

The report said: "While Modi has largely distanced himself from the nationalist jibes, the belligerent provocation of various Indian minorities has raised ethnic tensions. Along with a possible increase in violence, the government will face stiffer opposition in the upper house as debate turns away from economic policy. Modi must keep his members in check or risk losing domestic and global credibility."

It concluded: "Overall, it is unclear whether India can deliver the promised reforms and hit its growth potential. Undoubtedly, numerous political outcomes will dictate the extent of success."

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