Today, Arvind Subramanian the Chief Economic Advisor flayed global rating agencies, by saying that India is not upgraded “despite clear improvements in our economic fundamentals” which includes growth, Inflation, and current account performance. Despite the rapid growth, there is still BBB rating in India. Rating of China is been upgraded to AA, despite the rising debts and its slowing growth.
The Economic Research Department of State Bank of India has said India had a rating upgrade only once in the last 25 years, as per recent reports.
Arvind Subramanian the Chief Economic Advisor said that, "The ratings agencies have been inconsistent in their treatment of China and India," and in a wordplay barbed, took rating dig at standard and 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.
In short of expectations the pointing out instances where global agencies have fallen short, Arvind Subramanian said that they are failing consistently to provide advance warnings of financial crisis and downgrade a country after the fact. The US have given AAA ratings to mortgage ridden securities, which later created crisis and dragged down the economy.
For better ratings the India has consistently been pushing, which expected to act as an endorsement to Prime Minister Narendra Modi's economic policies and help bring in much-needed investment. Since 2014, when came in power, the NDA government has aggressively chased investment taking measures to bring down inflation and streamline processes.
The three key rating agencies, Moody’s, Fitch and Standard & Poor’s, which did not upgraded India, argues that government needs to do more. To upgrade India Moody’s refused it in November, said the economic initiatives of PM Modi's government are yet to produce results.
Among the issues the rating agencies have red-flagged are India's high debt-GDP ratio and bad assets of its banks. The agencies argue that the debt-GDP ratio, at 69%, is on the higher side and acts as a deterrent to private investment.
The ratings in India earlier have red-flagged in process of various agencies. Economic Affairs Secretary Shaktikanta Das in November said that they denied an upgrade even though the fundamentals and growth have steadily be improving.