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Arvind Subramanian Attacks Ratings Agencies Over 'Poor Standards'
Subramanian said there is a clear relationship between expert analysis and official decisions. (PTI)
New Delhi: India's chief economic advisor Arvind Subramanian on Thursday took to wordplay to slam global ratings agencies. He said they have “poor standards”, in an apparent dig at ratings agency Standard & Poor’s.
Subramanian said the credit ratings agencies are not upgrading India despite improvement in its economic fundamentals, PTI reported.
"The rating agencies have maintained India’s BBB rating, notwithstanding clear improvements in our economic fundamentals (such as inflation, growth, and current account performance). At the same time, China’s rating has actually been upgraded to AA-, even though its fundamentals have deteriorated," he said addressing the VKRV Memorial Lecture in Bengaluru.
"The ratings agencies have been inconsistent in their treatment of China and India. Given this record—what we call Poor Standards—my question is: why do we take these rating analysts seriously at all?" he said.
Citing example of the sub-prime crisis, he said questions were raised about their role in certifying as AAA bundles of mortgage-backed securities that had toxic underlying assets in the US financial crisis of 2008.
Similarly, their value has been questioned in light of their failure to provide warnings in advance of financial crises, he added.
"Before policy decisions, the expert analysis is often illuminating. But once the decisions are taken, it is truly striking how the tune and tone of the analysis changes. Analysts fall over backwards to rationalise the official decision," he said.
Last week, Economic Affairs Secretary Shaktikanta Das had also said that global rating agencies
are far detached from ground realities and must introspect as the reforms initiated certainly warranted an upgrade.
(With inputs from PTI)
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