The global rating agency, Standard and Poor (S&P), in its report on the Indian economic impasse, said Prime Minister Manmohan Singh “often appears to have limited ability to influence his Cabinet colleagues and proceed with the liberalisation policy he favours ...It would be ironic if a government under the economist, who spurred much of the liberalisation of India's economy and helped unleash such gains, were to preside over their potential erosion.”
It noted that setbacks to or reversals in India's path to a more liberal economy “could hurt its long-term growth prospects and, therefore, its credit quality.”
Evidently, even while not pointing to the specific measures of liberalisation, the agency appears to be referring to the government's flip-flop on opening up foreign direct investment to multi-brand retail and the more recent reports on the UPA's ally Trinamool Congress blocking pension reforms.
Among the BRIC nations (Brazil, Russia, India and China), the S&P noted, the other three enjoyed a higher rating or outlook than India.
Incidentally, the report comes at a time when views are expressed as to whether the ‘I' in BRIC should be replaced with Indonesia on account of its comparatively robust growth.
The only bright side of the report is to allay fears of India facing a 1991 type of crisis, saying the situation is much better now.