Letters: Indigenous ratings

Apropos Arup Roychoudhury’s report, “S&P bouncer: No upgrade for 2 yrs” (November 3), this is another instance of the casual approach adopted by international ratings agencies towards the reality in India.

Recent responses from the government and other stakeholders are indicative of a braver stance that sends out a clear message that times are changing and ratings agencies, which take positions to safeguard the business interests and greed of their masters may not be taken seriously even by those who have been giving some respect for their professional skills. 

India is a victim of foreign domination even today with respect to the assessment of the country’s self-esteem. Our creditworthiness, poverty level and comparative ranking on several human development indicators and the ability to protect against environmental hazards are all decided by outside agencies. They have no independent means to judge us other than with the data provided by our own agencies within the country.

It is comforting to see a change in approach in Delhi through various initiatives, including the effort to promote a new ratings agency — though for limited purposes — under the aegis of BRICS.  

Now that the National Institution for Transforming India Aayog has fewer responsibilities, it could be entrusted with the task of making existing organisations responsible for the compilation of statistics and ratings for the country in relation to other countries. The compilation would have to factor in parameters such as purchasing power parity, aggregate resources availability and institutions such as banks using internationally acceptable standards. If existing organisations are irreparably incompetent, new ones should replace them soon.

The time is opportune for India to think about setting up a ratings agency of international standards, which will understand the country and advise stakeholders about the health of domestic financial institutions and provide crucial input to financial institutions and governments abroad with which India has dealings.

Agencies like Standard & Poor’s and Moody’s are working within limitations. They, too, would be benefited if an internationally acceptable ratings agency came into being in India. 

We have, on record, observations such as the one made by the chief of International Monetary Fund (IMF), Christine Lagarde, when she was in India in 2015: “When adjusting for differences in purchasing prices between economies, India’s GDP will exceed that of Japan and Germany combined. Indian output will also exceed the combined output of the three next largest emerging market economies — Russia, Brazil and Indonesia”. The problem is, our own analysts and the media project India in poor light, relying on lobbying by external agencies.

In this context, a stanza from the Bhagvad Gita comes to mind, which translated loosely, means: One should lift oneself by one’s own efforts and should not degrade oneself; for one’s own self is one’s friend, and one’s own self is one’s enemy.

M G Warrier, Mumbai

Letters can be mailed, faxed or e-mailed to: 

The Editor, Business Standard

Nehru House, 4 Bahadur Shah Zafar Marg 

New Delhi 110 002 

Fax: (011) 23720201  ·  E-mail: letters@bsmail.in

All letters must have a postal address and telephone number