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A Fight for Rating: India Must Shine

Submitted by admin on March 8th, 2024

India’s Financial Bureaucracies including the PMO Office of Economic Affairs and the Finance Ministry are engaged in a fierce battle regarding the country’s rating improvement.

Moody’s, Fitch, and Standard & Poor have always rejected our argument, citing some impotent logic that always highlighted weakness in our country’s financial and economic activities, which prevented them from assigning India a higher rating. We contested their viewpoint but our words always fell on deaf ears.

It is now high time to wage a war against such nonchalance (or better to say, vengeance for nothing?). We must establish an international quality rating agency concerned about India and the issues in the developing world and push back against these powerful rating agencies. These agencies have certain restrictions regarding their rating and often have hidden agendas.

These fights are likely to happen in the following ways:

Ø  Solid and sensible intervention by the internally acclaimed economic and financial faculties at IIMs/Institutes of Cost Accounts/Institute of Chartered Accounts/Faculty teaching Economics at various Indian Universities is the need of the hour. The objective should be to lay out the foundation of a Ratings Agency sensitive to India and developing countries. This should be an independent body founded by an Act of Parliament and in no way, will be linked to the Central Government.

Ø  The rating agency must specify its rating and ranking methodology, in close alignment with the ranking procedure by the aforementioned international agencies. 

Ø  The Rating agency must rate India’s economic and financial reality and present their views of the country. All data and details shared with the aforementioned international agencies should be provided to them. If required, additional data must be provided. The concerned officials must answer and explain all their questions and queries. It is highly important to allow them to operate within the stipulated timeline to prevent any work delay and derive maximum benefits.

Ø  We must make sure that the international rating agencies do not steal the limelight and attention and that the Indian version is completely ignored. The treatment meted out to both should be fair, equitable, and transparent.

 Ø  In case the rating differs (the Indian side is likely to give a better rating), the Indian agency must present convincing and passionate arguments as to why the International agency has not been fair and square in its rating. It’s important for the Indian side to argue vociferously that the other side’s methodology, inquiry, and assessment have concept errors that must be corrected while highlighting the inherent judgment biases and deriding them publicly.

Only if we don’t accept their rating blindly and start questioning and probing their rating methodology and their professionals’ competence, it will shake them like never before and prompt them to rethink the rating practices. By fighting back, we can force them to take an unbiased stand, even though they will not be doing so willingly.  

Having qualified, competent, and reputed professionals on our side, who can call a spade a spade, will help build up psychological pressure on them. We must assert our strength and only then, can force others to forsake their age-old propaganda against us.