Chief Economic Adviser Arvind Subramanian flays ratings agencies for adopting inconsistent standards

By: | Updated: March 31, 2017 9:52 PM

Chief Economic Adviser Arvind Subramanian today flayed foreign credit rating agencies for adopting inconsistent standards while evaluating the country, saying that BRICS countries are looking to set up an independent rating agency to overcome it.

Chief Economic Adviser Arvind Subramanian today flayed foreign credit rating agencies for adopting inconsistent standards while evaluating the country, saying that BRICS countries are looking to set up an independent rating agency to overcome it. (PTI)

Chief Economic Adviser Arvind Subramanian today flayed foreign credit rating agencies for adopting inconsistent standards while evaluating the country, saying that BRICS countries are looking to set up an independent rating agency to overcome it. Stating that foreign credit rating agencies regularly meet him and evaluate the risks in the country, he said, “last time when they (credit ratings agency) came was in September 2016 and they said they will not upgrade rating of India”. “You know I might have written scathing OP-ED pages after they left. But as a government official I have to be more responsible. Instead what we did in the Economic Survey was to show how the inconsistency in some of the standards employed by the rating agencies are”, he said.

Subramaniam made these comments while delivering a lecture on ‘Economic Survey 2016-17; How India Surprises’ at IIT Madras here. “If (economic) growth comes down, risks increase.If there are too much borrowings in the country, risks increase.Despite India’s growth going up compared to China, the ratings agencies have put us seven notches below China”, he said. “We call this as poor standards. This is a kind of inconsistent evaluation (by ratings agencies”, he said.

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To avoid such inconsistent standards, the five-nation group of BRICS countries had decided to set up an “independent ratings” agency. The agency would be based on market-oriented principles, and further strengthen the global governance architecture. Referring to property tax collection in India, he said cities like Bengaluru, Chennai, Jaipur have been collecting lesser taxes compared to the potential they can. “The more a city collects property taxes, the better services they can provide. It is unambiguously true. But cities like Jaipur collect just three to five per cent of the potential. Bengaluru collects only 10 per cent as property taxes”, he said. “Even Chennai, I am sure it will be collecting about 7-8 per cent of property taxes than the potential it has. But with the use of technology, cities can estimate and collect property taxes better”, he said.

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