Mumbai, June 16: Duff & Phelps Credit Rating India (DCR India) in its economy update has raised doubts on India's disinvestment programme. Further, the rating agency also said that Union telecommunications minister, Ram Vilas Paswan's populist move to provide free telephone communications will place an additional burden of nearly Rs 300 crore on the department.According to Duff & Phelps, confusing signals have emanated from the ministry of civil aviations, which has plans to privatise Air India, but wants to retain government control. The report also questions whether a 26 per cent stake is enough to attract global airline majors to pick up stake.
Another disturbing trend, says the report, is the petroleum ministry's insistence to keep divestment in the sector in abeyance for the time being.Instead of divestment in the sector, the ministry is rooting for re-classification of the sector as a core sector. This would further delay disinvestment in the sector.
Ram Vilas Paswan's populist move has also been criticised in the report. According to the report there will be an additional burden of Rs 300 crore. This is excluding the installation cost on the finances of the department for connections to 3,02,000 DoT employees.
"This comes at a time when tariff is expected to witness a substantial reduction mainly on account of reduced tariff on long-distance local and international call rates", Duff & Phelps said.
The country's fiscal deficit also came in for criticism. The deficit of the central and state government has exceeded 10 per cent of the GDP. Says the report: "India needs to tread carefully so as not to allow the external debt burden to get out of hand", while making a mention of the fact that the country's vulnerability to the withdrawal of three types of foreign liabilities of a short duration, NRI bank deposits, stock of investment by FIIs and the short term debt. "If international sentiments deteriorate, there could be a significant withdrawal of foreign assets" the rating agency noted.
According to a white paper released by the finance ministry, India's external debt position has improved during the last decade. While the total external debt increased marginally, all other key indicators like debt service ratio, debt to GDP ratio, reducing component of short term debt etc, has shown a healthy trend. The report has termed external debt scenario of India as positive. Apart from a minor rise in the overall debt stock, all other key indicators showed a marked improvement over the years.
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