‘Why should we adhere to Western rules?’: EAC member Sanjeev Sanyal questions rating agencies’ India grading

Member of the Economic Advisory Council to the Prime Minister Sanjeev Sanyal questioned global rating agencies on India’s grades and said that the country should be placed at least a grade or two higher. Sanyal questioned the need to adhere to the rules of the West that countries like India had no role in framing. 

Speaking at CareEdge Conversations, hosted by credit rating agency CareEdge on the theme ‘India: Reversing the Gaze’, Sanyal said that it is “utterly absurd” that India just about makes it past the investment grade in the ratings of agencies. 

"In terms of sovereign ratings, if India was fairly rated, it should be at least one, if not two grades higher. There is no reason for India to be at the bottom of the investment grade," Sanyal said.

The economic advisor said that the frameworks of rating agencies should be questioned. 

"Why should we have to abide by rules and norms of the West, which we had no role in framing....just like the several indices where we feature below 100," he added.

This comes as Fitch continues to retain India’s sovereign rating at the lowest investment grade of ‘BBB-’ for over 16 years. In June 2022, Fitch revised its outlook on India's long-term foreign currency Issuer Default Rating (IDR) to ‘stable’ from ‘negative’, citing diminished downside risks to medium-term growth. The ratings agency said risks to the country's medium-term growth lessened due to rapid economic recovery and easing financial sector weakness, despite near-term headwinds from the global commodity price shock. 

Similarly, S&P and Moody’s also maintain such ratings for India at ‘BBB-’ and ‘BAA3’ levels, respectively, with a ‘stable’ outlook. 

Recently, India made a strong pitch for a sovereign rating upgrade with Moody’s and also questioned the parameters based on which they accord ratings. Moody’s representatives met government officials who highlighted the strong fundamentals of the Indian economy. An official, later, said that they are hopeful for a rating upgrade from Moody’s. 

(With agencies inputs)

Also read: India pitches for a rating upgrade with Moody's, questions methodology: Report

Also read: Fitch affirms India's rating at 'BBB-'; maintains stable outlook