Agencies show dual standards for India

New Delhi: The Economic Survey 2016-17 tabled in the Parliament on Tuesday pointed fingers at the Global rating agencies for not upgrading India's credit rating despite improvement in macroeconomic indicators.  

Alleging bias against India, chief economic advisor Arvind Subramanian pointed "inconsistent” standards while rating India vis-a-vis China, saying they have not taken into account reforms measures like GST, which is a "poor" reflection on their credibility.

"In recent years, the role of rating agencies has increasingly come into question," said the survey.

Dr Subramanian said that India has taken reform initiatives like FDI liberalisation, bankruptcy code, monetary policy framework agreement, GST and Aadhaar Bill. “Despite all these achievements, it is very interesting that the rating agencies have not reflected this," he said.

Rating agency S&P in November 2016 ruled out the scope for ratings upgrade for India for some considerable period, mainly on the grounds of its low per capita GDP and relatively high fiscal deficit.

“The actual methodology to arrive at this rating was clearly more complex. Even so, it is worth asking: are these variables the right key for assessing India’s risk of default?,” asked the Survey.  

Mr Subramanian said S&P has rated China six grades above India and has held China's ratings steady since 2010 despite economic growth slowing to 6.5 per cent from 10 per cent. In contrast, India's has moved in opposite direction and growth has increased.