India’s Seafood Export at all-time High in 2016-17 :MPEDA

India’s Seafood Export at all-time High in 2016-17 :MPEDA

Riding on a robust demand for its frozen shrimp and frozen fish in international markets, India exported 11,34,948 MT of seafood worth an all time high of US$ 5.78 billion (Rs 37, 870.90 crore) in 2016-17 as against 9,45,892 tons and 4.69 billion dollars a year earlier, with USA and South East Asia continuing to be the major importers while the demand from the European Union (EU) grew substantially during the period.
Frozen shrimp maintained its position as the top item of export, accounting for 38.28 per cent in quantity and 64.50 per cent of the total earnings in dollar terms. Shrimp exports increased by 16.21 per cent in terms of quantity and 20.33 per cent in dollar terms. Frozen Fish was the second largest export item, accounting for a share of 26.15 per cent in quantity and 11.64 per cent in dollar earnings, registering a growth of 26.92 per cent in terms of value.
USA imported 1,88,617 MT of Indian seafood, accounting for 29.98 per cent in terms of dollar. Export to that country registered a growth of 22.72 per cent, 33 per cent and 29.82 per cent in terms of quantity, value in rupee and US dollars, respectively. South East Asia remained the second largest destination of India’s marine products, with a share of 29.91 per cent in dollar terms, followed by the EU (17.98 per cent), Japan (6.83 per cent), the Middle East (4.78 per cent), China (3.50 per cent) and other countries (7.03 per cent). Overall, exports to South East Asia increased by 47.41 per cent in quantity, 52.84 per cent in rupee value and 49.90 per cent in dollar earnings.
“Increased production of L. Vannamei, diversification of aquaculture species, sustained measures to ensure quality, and increase in infrastructure facilities for production of value added products were largely responsible for India’s positive growth in exports of seafood,” said Mrs. Nirmala Sitharaman, Minister for Commerce and Industry.
The overall export of shrimp during 2016-17 was pegged at 4, 34,484 MT worth USD 3,726.36 million. USA was the largest import market for frozen shrimp (1, 65,827 MT), followed by the EU (77,178 MT), South East Asia (1, 05,763 MT), Japan (31,284 MT), Middle East (19,554 MT), China (7818 MT) and other countries (27,063 MT).
The export of Vannamei shrimp, a major seafood delicacy, improved from 2, 56,699 MT to 3,29,766 MT in 2016-17, registering a growth of 28.46 per cent in quantity. In value terms, 49.55 per cent of total Vannamei shrimp was exported to USA followed by 23.28 per cent to South East Asian countries, 13.17 per cent to the EU, 4.53 per cent to Japan, 3.02 per cent to the Middle East and 1.35 per cent to China.
Japan was the major market for Black Tiger shrimp with a share of 43.84 per cent in terms of value, followed by USA (23.44) and South East Asia (11.33). Frozen shrimp continued to be the principal export item to USA with a share of 94.77 per cent in dollar value while Vannamei shrimp to that country showed an increase of 25.60 per cent in quantity and 31.75 per cent in dollar terms.
Vietnam, with a share of 76.57 per cent in value (US dollar), was the major South East Asian market for Indian marine products, followed by Thailand (12.93 per cent), Taiwan (3.88 per cent), Malaysia (2.60 per cent), Singapore (2.21 per cent), South Korea (1.50 per cent) and other countries (0.30 per cent). Vietnam alone imported 3, 18,171 MT of Indian seafood, the quantity being much more than that of any other individual markets like US, Japan or China.
The EU continued to be the third largest destination for Indian marine products with a share of 16.73 per cent in quantity. Frozen shrimp was the major item of exports, accounting for 40.66 per cent in quantity and 55.15 per cent in dollar earnings out of the total exports to the EU. Exports of Vannamei shrimp to the EU improved by 9.76 per cent in quantity and 11.40 per cent in dollar value.
Japan, the fourth largest destination for Indian seafood, accounted for 6.83 per cent in earnings and 6.08 per cent in quantity terms. Frozen shrimp continued to be the major item of exports to Japan with a share of 45.31 per cent in quantity and 77.29 per cent in value out of the total exports to that country.
Besides frozen shrimp and frozen fish, India’s other major seafood product was frozen squid, which recorded a growth of 21.50 per cent, 59.44 per cent and 57 per cent in terms of quantity, rupee value and dollar earnings, respectively. Export of frozen cuttlefish showed a decline in quantity terms, but increased in the rupee value and dollar terms by 18.85 per cent and 16.95 per cent, respectively.
Dried items registered a growth of 40.98%, 20.14% & 79.05% in terms of quantity, rupee value and dollar terms, respectively. Indian ports handled a total marine cargo of 11,34,948 tons worth Rs 37,870.90 crore (5,777.61 million dollars) in 2016-17 as compared to 9,45,892 tons worth Rs 30,420.83 crore (4,687.94 million dollars) in 2015-16. Vizag, Kochi, Kolkata, Pipavav and Jawaharlal Nehru Port (JNP) were major ports that handled the marine cargo during 2016-17. Exports improved from Vizag, Kochi, Kolkata, Pipavav, JNP, Krishnapatanam and Tuticorin as compared to 2015-16.
Vizag port exported 1,59,973 tons of marine cargo worth Rs 9,294.31 crore (1,401.94 million US dollars) in 2016-17 as compared to 1,28,718 tons worth Rs 7,161 crore (1,105.76 million dollars) in 2015-16.
Vizag port was followed by Kochi (1,55,989 tons, Rs 4,447.05 crore), Kolkata (1,04668 tons, Rs 4,451.67 crore), Pipavav (2,32,391 tons, Rs 4,217.45 crore), JNP (1,49,914 tons, Rs 4,084.96 crore), Krishnapatnam (62,049 tons, Rs 3,701.63 crore), Tuticorin (42,026 tons, Rs 2,220.52 crore), and Chennai (37,305 tons, 1,693.87 crore).

Genetically modified crops: Taking fear-mongering to new heights

Concerns over GM mustard impacting pollination and honey production have no empirical basis

Pollinators such as honeybees play a vital role in our agricultural production systems. Roughly a quarter of the world’s food is estimated to come from transfer of pollen, from the male to female organs of the flowers of plants, by bees. India alone is home to four major species of honeybees – Apis mellifera (European bee), Apis cerana indica (Indian bee), Apis florea (dwarf floral) and Apis dorsata (rock bee) – of which the two have been domesticated, whereas the others are wildly-occurring and found mainly in forests. The domesticated bees are maintained in manmade hives not only for production of honey, wax and other by-products; beekeepers sell honeybees from their colonies also to other farmers for improving crop pollination and resultant yields.

Unfortunately, honeybees are in the news today for an entirely different reason related to unsubstantiated fear-mongering by so-called environmentalists and NGOs claiming to speak for farmers. Cultivation of genetically modified (GM) mustard now awaiting regulatory clearance, it is alleged, will cause a 30-40 per cent reduction in production of nectar in flowers, thereby attracting fewer bees to collect and make honey from it. The end-result: lower production as well as export of honey from India!

We have heard such wild theories before; they surface whenever any new GM crop is ready for environmental release. Take Bt cotton. At the time of its commercial approval in 2002, many anti-GM activists claimed that the widespread cultivation of cotton hybrids containing gene(s) derived from the Bacillus thuringiensis soil bacterium would hugely reduce pollinator populations. Well, farmers did resort to widespread cultivation of Bt cotton, which, in 2016-17, covered 10.6 million hectares or 95 per cent of the country’s total area under the crop. But this caused no harm to either bee activity or honey production.

A recent study by entomologists at the University of Agricultural Sciences, Dharwad (Karnataka), investigating the impact of Bt cotton on pollinator fauna and honeybees, showed no hindrance to their foraging activity. The study even suggested relative abundance of natural insect predators in cotton fields, which may have had to do with the overall reduced insecticide sprays courtesy Bt technology. In fact, the higher yields from Bt cotton are themselves a result of conservation of pollinators and more number of honeybee colonies.

Against this background, it is surprising to see the same stories of “threat” to the beekeeping industry being repeated in GM mustard, which has been recommended for commercial planting by the Genetic Engineering Appraisal Committee (GEAC) in the Union Environment Ministry. In Bt cotton, it could be said, for argument’s sake, that the alien genes introduced into the crop codes for a protein toxic to insects – even if specific to the heliothis species, particularly the dreaded American bollworm. But in GM mustard, even that logic does not hold.

The GM mustard, developed by Deepak Pental and fellow scientists at the Centre for Genetic Manipulation of Crop Plants in Delhi University, contains no insecticidal protein gene. It has mainly two genes (‘barnase’ and ‘barstar’) that allow for cross-pollination and hybridisation in mustard, which is largely a self-pollinating plant because of its individual flowers containing both female and male reproductive organs. In addition, there is a third ‘bar’ gene, conferring tolerance to the herbicide glufosinate. This is basically a marker gene, used to identify those plants that have been genetically modified – the non-GM plants cannot withstand glufosinate application – and are necessary for large-scale hybrid seed production.

Now, it should be obvious that a crop expressing hybrid vigour – GM mustard has been shown to yield 20-30 per cent more than the existing popular ‘check’ varieties – will have more flowers per plant. Wouldn’t that attract more rather than less honeybees and other pollinator insects? The Assessment of Food and Environmental Safety report, prepared by a sub-committee of scientific experts constituted by the GEAC, has clearly established no difference in honeybee foraging behaviour between GM and non-GM mustard. This was based on field studies in six locations over three seasons (2010-11, 2011-12 and 2014-15) as part of biosafety research level (BRL-1 and BRL-2) trials conducted by Indian Council of Agricultural Research and state agricultural universities. Biosafety studies, moreover, concluded that the ‘barnase’ and ‘barstar’ proteins weren’t detectable in the GM mustard pollens, hence ruling out any exposure – even if not harmful – to honeybees.

As far as the ‘bar’ gene goes, the presence of its proteins at very low levels in the pollen has not revealed any adverse effect on bee foraging, colony health or the quality of honey produced. The ‘bar’ protein, produced in glufosinate-tolerant GM crops, has received regulatory approval in as many as 20 different countries (including in the European Union), as per a 2016 International Life Sciences Institute study. Glufosinate spraying, as already noted, is required only for seed production. Even assuming farmers apply this herbicide, they would do so only during the first fortnight after germination or, at the most, within a month after sowing. Flowering in mustard happens only after 45 days, when there’s no threat from weeds and no necessity for herbicide application. How can, then, glufosinate spraying impact honeybee visits during pollination? On the contrary, removal of weeds will boost plant growth and make it flower more, which would attract larger bee populations.

If at all anybody is aware about the role of honeybees with respect to mustard, it’s the breeders themselves. Honeybees are known to visit the crop during flowering to enhance pollination. Studies carried out at the Indian Agricultural Research Institute, New Delhi have demonstrated that the exclusion of honeybees can significantly bring down yields in mustard, despite it being a self-pollinated plant. Another study at the GB Pant University of Agriculture and Technology in Uttarakhand has found as many as 18 different insect pollinators visiting mustard. Our scientists should be credited with at least minimum intelligence; no breeding programme in mustard will pass muster without factoring in the predominant role of honeybees in enhancing seed setting necessary for higher yields!

In conclusion, the concerns over GM mustard “contaminating” our honey and compromising the livelihoods of beekeepers are sheer figments of imagination. GM mustard is no different from GM canola, which is also a brassica genus plant and whose oil is already being imported into India. When no adverse impact on pollinators, bees and honey production has been reported by GM canola-growing countries, including Australia, Canada and the US, in the last 20 years, why should different standards apply to GM mustard that Indian farmers will hopefully plant soon?

Isro scripts history with GSLV Mark III rocket, GSAT-19 satellite launch

Isro’s latest satellite launch—the GSAT-19 onboard the GSLV MK III rocket—is its heaviest payload yet, demonstrating its capability to hurl next-gen satellites into orbit and carry astronauts to outer space

The Indian Space Research Organization (Isro) launched its heaviest rocket— the GSLV MK III—to put the GSAT-19 communications satellite into orbit, in a demonstration of its capability to hurl next-generation satellites into orbit and carry astronauts into outer space.

At 5.28pm, the 43m, 640-tonne geosynchronous satellite launch vehicle (GSLV) Mark III (D1), lifted off from the Satish Dhawan Space Centre in Sriharikota in Andhra Pradesh. The rocket’s mission was to place the 3,136kg GSAT-19 communications satellite into a geosynchronous transfer orbit (GTO) at 36,000km above earth.

The successful first developmental flight opens up commercial opportunities for Isro to launch heavy satellites for foreign customers besides reducing its own dependence on foreign space organizations such as Arianespace SA.

It demonstrates Isro’s ability to launch satellites weighing as much as 3.5-4 tonnes, up from 2.2-2.3 tons in the past.

“The GSLV-MKIII D1/GSAT-19 mission takes India closer to the next generation launch vehicle and satellite capability. The nation is proud,” Prime Minister Narendra Modi wrote in a Twitter message.

The launch is the latest in a string of successes for Isro, which in February launched a record-breaking 104 nano satellites into orbit, all onboard a single rocket. On 5 May, Isro launched the 2,230kg GSAT-9 to boost connectivity among South Asian countries.

In November 2013, India launched a space probe that has been orbiting Mars since September. Last year, in nine missions, it placed 32 satellites in orbit.

The Mars feat burnished India’s reputation as a reliable low-cost option for space exploration, with its $73 million price tag drastically undercutting US space agency NASA’s $671-million Maven Mars mission.

The GSLV-Mark III rocket is India’s heaviest rocket, weighing as much as five fully loaded Boeing jumbo jets or 200 fully grown elephants.

Indian space scientists worked “relentlessly for decades and for this project since 2002 to successfully put the satellite into orbit”, Isro chairman A.S. Kiran Kumar said. “This is a historic day for Isro.”

The flight is expected to boost India’s aspirations of carrying out manned space missions. Isro is not considering this at present. “It is one step at a time,” Kumar said in a recent interview with Mint.

The successful mission means Isro now has a third stream of operational launch vehicles after the polar satellite launch vehicle and the GSLV-Mark II.

Approved in 2002, the three-stage vehicle with two solid motor strap-ons can also carry payloads weighing up to 10,000kg into the lower earth orbit at around 800km above earth.

Although Isro did not disclose the cost of the project, Kumar said in the interview that it would result in about 25% savings on the cost of satellite launches.

“We still depend on foreign procurement for heavy satellites. For example, the GSAT-17 is launching end of June from Ariane. In the very near future, this will not be required.” he said.

After its separation from the GSLV MK III in GTO, GSAT-19 will reach its geostationary orbital home using an electronic propulsion system.

The satellite will use multiple spot beams covering all of India. Isro claims this will increase internet speeds and connectivity, depending on the ground infrastructure.

The first suborbital test flight of GSLV Mark III was successfully conducted on 18 December 2014.

Hottest’ planet in universe discoveredKELT-9

Hottest’ planet in universe discovered
Scientists have discovered the hottest known planet located 650 light years from Earth, which is warmer than most stars in the universe and sports a giant, glowing gas tail like a comet.

The Jupiter-like planet orbits a massive star KELT-9 every day and a half, researchers said.

With a day-side temperature peaking at 4,326 degree Celsius, the newly discovered exoplanet, designated KELT-9b, is hotter than most stars and only 926 degree Celsius cooler than our Sun.

Glowing gas tail

The ultraviolet radiation from the star it orbits is so brutal that the planet may be evaporating away under the intense glare, producing a glowing gas tail.

The gas giant 2.8 times more massive than Jupiter but only half as dense, because the extreme radiation from its host star has caused its atmosphere to puff up like a balloon.

Tidally locked

Since it is tidally locked to its star — as the moon is to Earth — the day side of the planet is perpetually bombarded by stellar radiation, and, as a result, the planet is so hot that molecules such as water, carbon dioxide and methane can not form there.

“It’s a planet by any of the typical definitions based on mass, but its atmosphere is almost certainly unlike any other planet we’ve ever seen just because of the temperature of its day side,” said Scott Gaudi, professor at the Ohio State University in the U.S. and lead author of the study published in the journal Nature.

Scientists have discovered the hottest known planet located 650 light years from Earth, which is warmer than most stars in the universe and sports a giant, glowing gas tail like a comet.

The Jupiter-like planet orbits a massive star KELT-9 every day and a half, researchers said.

With a day-side temperature peaking at 4,326 degree Celsius, the newly discovered exoplanet, designated KELT-9b, is hotter than most stars and only 926 degree Celsius cooler than our Sun.

Glowing gas tail

The ultraviolet radiation from the star it orbits is so brutal that the planet may be evaporating away under the intense glare, producing a glowing gas tail.

The gas giant 2.8 times more massive than Jupiter but only half as dense, because the extreme radiation from its host star has caused its atmosphere to puff up like a balloon.

Tidally locked

Since it is tidally locked to its star — as the moon is to Earth — the day side of the planet is perpetually bombarded by stellar radiation, and, as a result, the planet is so hot that molecules such as water, carbon dioxide and methane can not form there.

“It’s a planet by any of the typical definitions based on mass, but its atmosphere is almost certainly unlike any other planet we’ve ever seen just because of the temperature of its day side,” said Scott Gaudi, professor at the Ohio State University in the U.S. and lead author of the study published in the journal Nature.

malnutrition in child

With one of the highest rates of child malnutrition in the world, India has won notoriety as one of the nutritional basket cases of the world over the past few years. Although India has witnessed significant progress in its battle against child malnutrition over the past decade, the progress has been quite uneven, and child malnutrition rates still remain high in many parts of the country, data from the latest round of the National Family Health Survey (NFHS) shows.

The survey of over 6 lakh households conducted in 2015-16 shows that over the past decade, the proportion of underweight children fell nearly 7 percentage points to 36%, while the proportion of stunted children (those with low height-for-age, a measure of chronic undernourishment) declined nearly 10 percentage points to 38%. Despite the progress, these rates are still higher than those of many poorer countries in sub-Saharan Africa. And in some of the worst affected districts such as Purulia in West Bengal and Nandurbar in Maharashtra, every second child is undernourished.

Such high level of child malnutrition imposes a huge economic cost. Malnutrition accounted for losses worth at least 8% of global gross domestic product (GDP) in the 20th century because of “direct productivity losses, losses via poorer cognition, and losses via reduced schooling”, according to medical journal The Lancet, which published a special issue on the topic in 2013. The losses are higher for high-burden countries such as India.

As in the case of adult undernutrition rates, districts with the highest levels of undernutrition seem to be clustered largely in the central parts of the country. The bottom quartile of districts ranked according to child malnutrition rates includes not just districts from the most deprived tribal belts of central and eastern India but also some of the more urbanized districts of the country such as Udaipur in Rajasthan, Aurangabad in Maharashtra, Lucknow in Uttar Pradesh, Patna in Bihar, and Ranchi in Jharkhand. However, overall urban child malnutrition rates are lower than that of rural India.

Districts with relatively low levels of child undernutrition are clustered largely in the extreme north, the extreme south, and in the north-eastern parts of the country, as the district maps show. Some of the best-performing districts in the country with the lowest proportions of underweight children such as Mokokchung in Nagaland and Aizawl in Mizoram lie in North-east India.

Apart from poverty, there seems to be three key differences between districts with high and low levels of child malnutrition: the status of women, the kind of diets fed to children, and access to toilets.

One of the primary reasons for children being undernourished in the country is that often their mothers are undernourished. One in five women are underweight in India. Women who are themselves undernourished or have a pregnancy at an early age, are at a greater risk of delivering low birth-weight babies, who are nutritionally disadvantaged right at birth. Also, women without education or without much voice in their families often fail to ensure adequate diets for their children even when there is adequate food in the household. Districts with a high proportion of women who are illiterate and who have married early tend to have high ratios of undernourished children, the latest data shows. Districts where the proportion of children receiving an age-appropriate diet is low also tend to have high ratios of undernourished children.

The link between sanitation and undernutrition is even stronger. Districts with low levels of access to toilets have much higher rates of child undernourishment compared to districts with relatively high levels of access to toilets. In a densely populated country such as ours, the lack of sanitation contributes to the spread of infectious diseases. Children fall prey more easily to such diseases, and tend to lose their ability to absorb nutrients, leading to undernutrition.

Among states, Tripura and Himachal Pradesh seem to have made impressive strides in improving the rates of both stunting and underweight among children since 2005-06, when the previous NFHS round took place. Tripura has moved up three rungs between 2005-06 and 2015-16 to occupy the third position—behind Kerala and Goa—among states with the lowest levels of stunting. Himachal Pradesh has moved up five rungs over the same period to occupy the fifth position among states ranked according to levels of stunting. States such as Chhattisgarh and Punjab have seen significant improvements in rates of stunting over the past decade but their progress in reducing the proportion of underweight children has been less impressive. Andhra Pradesh and Karnataka have both seen very slow progress in underweight and stunting rates over the past decade, and have slipped several notches in the rankings of states.

Uttar Pradesh, Bihar and Madhya Pradesh have made some progress in the battle against child malnutrition but they continue to be among the worst states in terms of rates of underweight and stunting. They also continue to account for most of India’s undernourished children, as they did a decade ago

India’s double burden of malnutrition

Among large cities, Kolkata and Hyderabad have the greatest proportion of obese people in India

Malnutrition in India has always been synonymous with under-nutrition. Not anymore. Data from the latest round of the National Family Health Survey (NFHS) shows that obesity among adults is nearly as big a problem in the country as under-nutrition. Even as under-nutrition continues to remain extraordinarily high in the poorer parts of the country, obesity has reached endemic levels in some of the richer parts of the country, the survey of over 6 lakh households conducted in 2015-16 shows.

When the previous round of NFHS was conducted in 2005-06, the proportion of underweight men and women in the country was found to be nearly three times the proportion of overweight men and women, respectively. The latest survey shows that the proportion of overweight women in India at 20.7% is only 2 percentage points lower than the proportion of underweight women. The trend among men is similar, with nearly one in five men overweight today.

While the proportion of underweight adults has fallen over the past decade, the proportion of overweight adults has shot up sharply. Individuals who have a body mass index, or BMI, of 25 or more are considered overweight while those with a BMI less than 18.5 are considered underweight. Women seem to be affected more by both forms of malnutrition compared to men. More women than men are obese, and more women than men are underweight, the data shows.

According to some scholars, the twin problem of high malnutrition and growing obesity may have a common cause: a high proportion of low birth weight babies in India. According to one hypothesis (the so-called thrifty genotype hypothesis), under-nutrition in the pre-natal stage programmes the foetal tissues to utilize food efficiently, making it difficult for low birth weight babies to deal with an abundance of food in later life. The double malnutrition trap can be particularly dangerous for Asian economies such as India, where urban populations are rising, and where people increasingly face a sedentary lifestyle.

A look at district-level data, however, shows a clear divide between districts which have high concentration of underweight men and women and those which have high concentration of obese or overweight men and women. At one end of the spectrum are districts such as Purulia in West Bengal and Malkangiri in Odisha, where nearly one in two women are underweight. These districts are among the poorest in the country, and have been hotbeds of leftwing extremism for many years. At the other end of the spectrum are cities such as Kolkata and Hyderabad, where four out of every 10 women are overweight. Delhi and Mumbai also figure in the top quartile of districts with high levels of obesity but the proportion of obese people in these cities are lower compared to Kolkata and Hyderabad.

Kolkata is somewhat of an outlier in West Bengal, which has a relatively low proportion of overweight women. Hyderabad though reflects a state-level trend. Along with other southern states such as Kerala and Tamil Nadu, Andhra Pradesh has among the highest levels of obesity in the country.

A look at the district map suggests that most of the high-obesity districts are clustered largely around the two ends of the country: the extreme north and the extreme south. The undernourished districts are largely located in central India. There seems to be a strong correlation between affluence, obesity and lifestyle diseases. Districts with a higher proportion of rich households (those with TV, computer, phone, and motorised two-wheeler/four-wheeler as per census 2011 data) tend to have a higher proportion of obese people and lower proportion of underweight people.

The link between malnutrition and sanitation is even stronger. Districts with low levels of toilet access have high levels of undernutrition and low levels of obesity. The converse is true for districts with high levels of access to toilets.

The stark nutritional divide across the country in many ways mirrors the divide in growth and development across the country.

The puzzle of India’s sovereign ratings

The argument that high debt-to-GDP ratio is the reason for not upgrading India, is fundamentally flawed

India has been languishing at the bottom of the investment grade ladder in the ratings universe. In fact, to put it on record, India has had a net rating upgrade only once in the last 25 years. One of the common arguments made by rating agencies for not upgrading India’s rating is its high debt to gross domestic product (GDP) ratio. At 69.5% of GDP, the agencies argue that this is on the higher side and effectively acts as an enabling factor for crowding out private investment. This argument that high debt to GDP ratio is the reason for not upgrading India is, however, fundamentally flawed, for two reasons.

Click here for enlarge

First, there are a number of countries which are rated above India but have a significantly higher gross general government debt. In fact, most of these countries have debt positions which have been worsening over time but this has not affected their ratings much. India, on the other hand, has been consistently on the path of reducing its debt to GDP ratio to its present level from a peak of 84% in 2003.

One may think that it may be because of other macro fundamentals of these developed countries. If we look at major economic indicators of India in comparison to developed countries, India fares reasonably well in most of these. India is the fastest growing economy in the world, with a low unemployment rate and improving inflation and current account trajectories.

Next we look at how India is performing with respect to the group of countries that are rated one or two notches higher—almost all of them are developing countries. Here again we see India is performing much better in terms of macro performance, albeit with higher gross general government debt, but much lower external debt.

Thus, it seems the only indicator or figure that matters to rating agencies for the sovereign ratings of developing countries is the domestic debt to GDP ratio. The performance on other indicators does not get its due importance.

The other reason why we think the rating agencies’ rhetoric is fundamentally flawed is that it is the composition of the government debt to GDP per se that matters for any discussion on debt solvency. For India, public debt is mostly internal. As a conscious strategy, issuance of external debt (denominated in foreign currency) is kept very low in India. Overseas investors account for only 4% of the total government bonds and the majority of the investment comes from scheduled commercial banks, insurance companies, Reserve Bank of India and provident funds (accounting for around 85%).

It is ironic that Japan, which has a composition of government debt profile almost similar to that of India (bank and insurance companies account for 50% of the government debt), is rated at A+ with a debt/GDP ratio of 239%.

Interestingly, if we plot the debt/GDP and rating action (proxied by a numeric scale) for countries like Portugal, Ireland, Italy and Spain during the worst years of the financial crisis (2008-2011), we find there is little causation between the rating actions and movements in domestic debt/GDP. In fact, the regression coefficient (dependent variable is the rating action and independent variable is debt/GDP) is weak and not statistically significant. This result shows that even in periods when the European debt crisis was at its worst phase, there was little evidence to support rating actions acting as a leading indicator of deterioration in economic fundamentals.

There is another aspect to this debt to GDP ratio. Based on stock prices on the Mumbai stock exchange, as on 30 April 2017, the market capitalization of public sector undertakings (which includes Centre and state-level public enterprises, public sector banks as well as other companies where Centre and/or states and/or government companies and financial institutions have the single largest shareholding) stood at Rs13.7 trillion. These assets are equivalent to around 12% of the overall gross government debt. This also provides an additional comfort in debt management, and we wonder whether they are taken into account while examining India’s debt solvency.

Our primary concern is, however, different. Despite robust macro fundamentals, India may not witness a rating upgrade soon. This is because with the fiscal responsibility and budget management (FRBM) committee emphasizing attaining a 60% debt to GDP ratio with a ceiling of 40% for the Centre and 20% for the states, by 2023, the rating agencies will get a reason to maintain the status quo, despite the other visible advances which India has made.

The interesting point is that even in the FRBM committee report, there have been conflicting opinions about the 60% target of debt to GDP ratio. The methodology for arrival of the 60% number has been questioned. Furthermore, the fiscal deficit number of 2.5% to be achieved in the medium term also seems to have been arbitrarily arrived at and is based on unrealistic assumptions. In fact, the dissent note by chief economic adviser (CEA) Arvind Subramanian clearly states that India is not in any dire situation that it should adopt such a drastic reduction in debt and fiscal numbers. Moreover, the country was able to do significantly well when the debt to GDP ratio was as high as 84% in 2003 without failing to meet any of its debt servicing obligation. We also second the opinion of the CEA about focusing on primary deficit, rather than targeting multiple indicators (namely debt to GDP ratio, fiscal deficit and revenue deficit) to maintain the sustainability of our fiscal position (FRBM Review Committee Report Volume I, Annex-V).