NEW DELHI: India’s Chief economic adviser Arvind Subramanian on Thursday flayed global rating agencies, saying they have not upgraded India “despite clear improvements in our economic fundamentals” which include inflation, growth, and current account performance.

Despite its rapid growth, India still has a BBB rating. China’s rating has been upgraded to AA, despite its slowing growth and rising debts, NDTV said.

The Economic Research Department of State Bank of India has said the country had a rating upgrade only once in the last 25 years.

“The ratings agencies have been inconsistent in their treatment of China and India,” said Mr Subramanian, and took a dig at ratings agency Standard & Poor’s. “Given this record, what we call Poor Standards, my question is: why do we take these rating analysts seriously at all?” he said.

Pointing out instances where global ratings agencies have fallen short of expectations, he said they consistently fail to provide advance warnings of financial crisis and downgrade a country after the fact. In the United States, they had given AAA ratings to mortgage-ridden securities, which later dragged down the economy and created a crisis.

India has been consistently pushing for better ratings, which is expected to act as an endorsement to Prime Minister Narendra Modi’s economic policies and help bring in much-needed investment. Since coming to power in 2014, the NDA government has aggressively chased investment, and has taken measures to streamline processes and bring down inflation.

But the three key ratings agencies — Moody’s, Standard & Poor’s and Fitch — have not upgraded India, contending that the government needs to do more. In November, Moody’s refused to upgrade India, and said the economic initiatives of Mr Modi’s government are yet to produce results, NDTV said.

Among the issues the rating agencies have red-flagged are India’s high debt-to-gross domestic product (GDP) ratio and bad assets of its banks. The agencies argue that the debt-GDP ratio, at 69 per cent, is on the higher side and acts as a deterrent to private investment. India earlier red-flagged the ratings process of various agencies. In November, Economic Affairs Secretary Shaktikanta Das said India was being denied an upgrade even though growth and fundamentals have been steadily improving.

Published in Dawn, May 12th, 2017

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Kurram atrocity
Updated 22 Nov, 2024

Kurram atrocity

It would be a monumental mistake for the state to continue ignoring the violence in Kurram.
Persistent grip
22 Nov, 2024

Persistent grip

PAKISTAN has now registered 50 polio cases this year. We all saw it coming and yet there was nothing we could do to...
Green transport
22 Nov, 2024

Green transport

THE government has taken a commendable step by announcing a New Energy Vehicle policy aiming to ensure that by 2030,...
Military option
Updated 21 Nov, 2024

Military option

While restoring peace is essential, addressing Balochistan’s socioeconomic deprivation is equally important.
HIV/AIDS disaster
21 Nov, 2024

HIV/AIDS disaster

A TORTUROUS sense of déjà vu is attached to the latest health fiasco at Multan’s Nishtar Hospital. The largest...
Dubious pardon
21 Nov, 2024

Dubious pardon

IT is disturbing how a crime as grave as custodial death has culminated in an out-of-court ‘settlement’. The...