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Dissected: Vinod Dua’s video for TheWire downplaying Moody’s upgrade

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Ashutosh Muglikar
Articles on Corporate Laws, Policy, Economics and Politics. Maverick. Lover of Ideas. Slayer of Hoaxes.

Media professionals and the opposition had worked overtime to build a narrative that the economy is in the dumps. Hours and hours of screen time, tweets, and columns were written to build this image that Modinomics is a failure. When International agencies came out with their surveys, analysis and reports, all the efforts of the Left leaning media crumbled. This lead to sudden outbursts against the messenger and further meltdown via tweets and videos. Let us look at one such video from Mr Dua, produced by TheWire, which is riddled with inaccuracies, false claims and signs of frustrations:

1. Mr Dua calls Moody’s report a “survey”.

Moody’s report is not a survey, but an analytical report, where professionals and trained experts look at hard data of an economy and come up with reports. A survey is an exercise where the opinion of a sample population is taken. Both, an analytical report and a survey, are far superior to a journalist having no domain knowledge, pontificating sitting in an air-conditioned studio, in front of a camera. For Mr Dua to call Moody’s report as a “survey”, exposes Mr Dua’s own illiteracy.

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2. Mr Dua says this rating upgrade was a “Doobte ko tinke ka sahaara” (last straw of hope) for the Centre’s ministers who held press conferences on this report

The World Bank’s Ease of Doing Business report raised India’s rank by an unprecedented 30 places. A survey by Pew gave highest acceptance to Narendra Modi. And now the ratings upgrade by Moody’s. All these have come in the spate of a few weeks. Consequently, the Indian Government has no shortage of good news, coming from reputed international organisations. In such a situation, how is the Moody’s report the “last straw of hope” for the Government? If anything, there have been too many positives in the past 2-3 weeks. Is Mr Dua living under a rock?

3. Mr Dua claims that while Moody’s ratings upgrade is fine, we are not being told about the position of NPAs. He claims that the then Governor of RBI (alluding to Raghuram Rajan) had forced banks to disclose NPAs.

The ignorance shown here is amazing. Or is it willful deceit? Moody’s report has a separate paragraph on the banking system and the Government’s actions against NPAs:

GOVERNMENT SUPPORT TO PUBLIC SECTOR BANKS MITIGATES BANKING SECTOR RISK, SUPPORTS GROWTH

Recent announcements of a comprehensive recapitalization of Public Sector Banks (PSBs) and signs of proactive steps towards a resolution of high NPLs through use of the Bankruptcy and Insolvency Act 2016 are beginning to address a key weakness in India’s sovereign credit profile.

While the capital injection will modestly increase the government’s debt burden in the near term (by about 0.8% of GDP over two years), it should enable banks to move forward with the resolution of NPLs through comprehensive write-downs of impaired loans and increase lending gradually. Over the medium term, if met by rising demand for investment and loans, the measures will help foster more robust growth, in turn supporting fiscal consolidation.

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Thus it is clear that the ratings upgrade has come in spite of the banks’ NPA problems (which are UPA’s gift to this government), and the Government’s “proactive steps” towards a resolution of these issues have been appreciated. Further, the statement saying Rajan was the one who went after NPA’s makes sly hints that the RBI Governor after Rajan, has fallen silent on the same. This is far from the truth since even now, RBI is going after banks to disclose NPA’s correctly. Mr Dua should read up.

4. Mr. Dua claims that banks have already lost the money against loans which are NPA (“karze jo doob chhuke hain, wapas nahi aayenge”

Perhaps this is most unimaginative and brazen lie by a journalist. NPA does not mean money wont be recovered. Write off doesn’t mean waiver. When an account is declared NPA, banks take action under Debt Recovery Tribunal, Insolvency Code, SARFEASI Act and even CBI and ED proceedings are conducted. All secured assets are auctioned and funds recovered. In fact, this “fire sale of corporate assets” has been documented in media as well. If Mr Dua somehow knows for a fact, that the money will not come back at all, he should immediately head to the RBI, and reveal his source of information.

5. Mr Dua says: “Moody’s ratings upgrade, is directly linked to the health of our banks, and it should not be construed that this upgrade has come due to decisions which were taken (by the Government)”

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Again, its obvious that Mr Dua has not read the Moody’s report at all. In the report, Moody’s gives multiple reasons for India’s ratings upgrades (emphasis added):

Key elements of the reform program include the recently introduced Goods and Services Tax (GST) which will, among other things, promote productivity by removing barriers to interstate trade; improvements to the monetary policy framework; measures to address the overhang of non-performing loans (NPLs) in the banking system; and measures such as demonetization, the Aadhaar system of biometric accounts and targeted delivery of benefits through the Direct Benefit Transfer (DBT) system intended to reduce informality in the economy. Other important measures which have yet to reach fruition include planned land and labor market reforms, which rely to a great extent on cooperation with and between the States.

The above paragraph from the Moody’s report shows that there were various factors which they considered, and the measures to address the NPA problems and banks’ health, were just one of the considerations. Why would Mr Dua feel compelled to lie is conundrum. Is it because he has previously regularly said that measures like Demonetisation were failures, yet real experts are hailing the same measures as reforms?

6. Mr. Dua says in the video “Last year, in 2016, Moody’s had reduced India’s ratings”

Before we come to debunking this, lets explore how financially illiterate Shri Dua is. See the screen grab from the video, when he says this:

While the screen grab says “Moody’s lowers India’s growth forecast”, Mr Dua claims Moody’s had reduced India’s ratings. Forecast vs Ratings. Mr Dua either does not know the difference between the two, or he knows and is deliberately conflating the two. Either way he is wrong. A ratings upgrade for India from Moody’s has happened for the first time in 14 years. Forecast modifications happen every quarter and are done by any number of agencies or organisations. On a side note, while Mr Dua claims this happened in 2016, this report which was used by Mr Dua, was published in August 2015.

7. Mr. Dua says for the Pew survey, sample size was of 2464 odd, and was done from January to February 2017 when the PM asked for 50 days to sort out demonetisation

The jibe about sample size has been comprehensively rebutted here. It is sad that a journalist has no idea how surveys are conducted. Secondly, the PM had asked for 50 days for demonetization to play out in November 2016. The period got over in the first week of January. January and February 2017 were months when cash supply was still constrained, and the media was crediting all sorts of deaths to Demonetisation. In all of this, during a cash crisis, 9 out of 10 Indians backed the PM. It would seem like Mr Dua could not digest this and is deliberately spreading canards out of undiluted hatred.

7 factual issues in one video. Once can be coincidence, twice happenstance, but seven times? Mr Dua, needs to do dua that nobody with half a mind starts watching his other videos, else he might regularly feature in such columns.

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Ashutosh Muglikar
Articles on Corporate Laws, Policy, Economics and Politics. Maverick. Lover of Ideas. Slayer of Hoaxes.

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