Upset over not getting a rating upgrade, India has lashed out at global rating agencies saying they are far detached from ground realities and must introspect as the reforms initiated certainly warranted an upgrade. Economic Affairs Secretary Shaktikanta Das said India was being denied an upgrade even as growth and fundamentals improve. In past too, India has questioned the methodology used by global rating agencies saying the nation compares favourably with other emerging countries on metrics such as default risk. In particular, it points to S&P Global Ratings keeping China at AA- despite rising debt and slowing growth while India has been kept at one step above junk.
Moody’s and Fitch too give similar rating citing Asia’s widest fiscal deficit as a drag on the nation’s sovereign rating. “So far as government is concerned, it will continue to take measures which are good for the country, which are good for the economy. The government will continue to take structural reform measures, step up public investment, do what is good for the economy, for our growth, for our employment generation,” Das told Indian media here. India, he said, has shown excellent growth over the last few years.
“The kind of number and quality of reforms which India has experienced in last two-three years is unparallelled. It is only in India that you see this kind of reforms are happening,” he said. Das said with all these changes, India has continued to maintain 7 per cent plus GDP growth rate, while the ease of doing business has improved considerably. Even after this “if the rating agencies do not give an upgrade to India, if they do not give any weightage to it, I think they are probably far detached from ground realities. So, it is really for them to introspect,” he said.
Earlier this week, Fitch cited weak fiscal position to keep India’s sovereign rating unchanged at ‘BBB-‘, the lowest investment grade with stable outlook assigned to the country more than a decade ago. While India is targeting a fiscal deficit target of 3.2 per cent this year, it will bring it down to 3 per cent next year. China’s reported debt surged to 264 per cent of its GDP at the end of 2016, from 193 per cent in 2009. In contrast, India’s debt fell to 66 per cent of its GDP from 72 per cent.