With reference to “Rating the raters” (Weekend Ruminations, November 18), T N Ninan has given a brief but excellent summing up and analysis of the challenges external rating agencies
pose, encapsulating many fallacies in the rating exercise usually ignored by the media and analysts while celebrating an upgrade or lamenting an unusual downgrade.
One enjoyed reading the comment on “definition of corruption”. Strangely, what is “bribe” in India is accounted legally as “promotional expenses” or “discounts allowed” in other countries and the corruption tag gets removed as the expenses become “legal”. This applies to several parameters
applied by rating agencies which parrot the feelings of their masters.
Just one more example: This paper also has accepted that “debt to GDP ratio” is high in India. True. But we forget that in the US, government debt to GDP ratio was 106.10 in 2016. You can say it’s no comparison! Let’s go back: The percentage of debt to GDP in the US averaged 61.14 from 1940 to 2016 (118.90 in 1946 and 31.70 in 1981). The US had a GDP figure
of US $18.57 trillion in 2016, which may cross $19 trillion next year. Ever wondered why the US government should have a public debt figure? And where the borrowed money goes?
My view is that these figures should be filtered for unproductive “war expenses” including manufacture of equipment beyond a minimum threshold needed to defend the geographical boundaries, before comparisons are made. India needs a world-class rating agency of its own.
M G Warrier
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