India’s Chief Economic Advisor (CEA) Arvind Subramaniam has questioned the integrity of International rating agencies saying that they have lost their credibility regarding India and upscaling China. CEA questioned the rating agencies saying “they have not improved India’s rating despite strong economic and fundamental growth.”
India has been one of the fastest growing economies of the world and still has got a BBB rating while China has been upgraded to AA rating despite slower growth compared to India and increasing debts. AA rating is given to those obligators who have the extreme strong financial capacity to meet its demands. Economic Research Department of State Bank of India mentioned in a recent report that India had an upgrade in the rating only once in the last 25 years.
“The rating agencies have treated India and China very differently. They have rated India poorly despite fundamental and economic growth.” said Arvind Subramanian and questioning the standard of the rating agencies he said, “Why do we even consider these ratings seriously?”
The CEA without naming any particular agency questioned the standard of the rating agencies when they had certified America with an AAA rating to mortgage-ridden securities which created the economic crisis; failing to provide warnings about the financial crisis.
The Narendra Modi-led government has constantly been trying to push to bring in more investment after coming to power in 2014 as an endorsement for the government policies trying to bring down inflation. Top rating agencies of the world Moody, Standard and Fitch have not upgraded India’s rating despite efforts from the government and needs to be done more to persuade them to upgrade it to AA.
The rating agencies have cited debt-GDP ratio issues which stand to be 69% on the higher side. NPA of the banks has been an issue and acts as a restraint to the private investment to come.
BW Reporters
The author is a correspondent with BW Businessworld with keen interest in HR and employee welfare.
