As a cautionary measure, the big three credit rating agencies assigned their lowest investment grade to the country.Today, India is the world’s fifth-largest and the fastest-growing global economy. In fact, it is one of the most attractive markets for foreign investors.But global credit rating agencies have not budged (see table). “Conceptually, rating agencies have erred because they are using the same yardstick for emerging and developed countries, which is not right,” he points out. “Rating agencies need to relook at their methodologies and not just look at plain numbers but understand the context.” He believes that India’s credit rating should be in the A-category.So, what are the main gaps in their methodology or data gathering process?Sanyal explains: “There are serious issues with the biased methodologies used by global rating agencies. One major issue is that around 20 percent of the weightage in the sovereign rating is driven by subjective indicators of governance, political stability and so on.

Source: Forbes December 27, 2023 14:16 UTC