It seems, after successful ICBM and other military hardware test launches, it’s now India’s economic progress that has left the Chinese power elite uncomfortable. After targeting the Indian government’s demonetization move, equating it with terms like ‘gamble with money’ and ‘failure’, it is now about Indian stand on the global credit rating agencies.
While presenting India’s annual Economic Survey on January 31, the Chief Economic Adviser (CEC) Arvind Subramanian had slammed the rating agencies. A PTI report quotes him, “How did the rating agencies behave? They despite all these risky developments they did not downgrade China and our rating was maintained six notches below China. This is a reflection on how these institutions work. You should question them.”
Global Times, China’s official mouthpieces, now has responded to it. An opinion piece by a senior economist writes in Global Times that ‘it is noticeable that S&P has not adjusted India’s rating since 2011, Fitch hasn’t done so since 2006 and Moody’s hasn’t changed since 2004. With its rating left at such a low level for over 10 years, India’s dissatisfaction and jealousy toward China seems understandable’.
Mark the words ‘dissatisfaction and jealousy toward China’ here. They tell the prevailing Chinese mindset. This opinion piece written by an economist has economic jargons and technical details to prove its point that ‘instead of being obsessed with the sovereign credit ratings themselves, India should take a more macro view so as to fundamentally find out the underlying problems and solve them’. Indian economists, too, have successfully used economic parameters and jargons to explain the bias of the rating agencies.
While presenting India’s annual Economic Survey, CEC Subramanian, had come down heavily on the credit rating agencies, accusing them of having a China bias. Questioning rating agencies’ ‘poor methods and inconsistent standards’, Subramanian had said that the sovereign rating agencies had consistently ignored India’s economic reform measures like GST, Aadhaar integration, monetary policy framework agreement and eased FDI regime, coupled with its commendable fiscal discipline and strong growth trajectory.
Subramanian had further said that the rating agencies failed to see that India’s economy was growing at a faster pace while China’s was slowing down, from an average of 10 percent to 6.5 percent now. China’s sovereign ratings, fixed years ago, remained same even if its economy came down. The rating agencies have done the same with India. The contention is the approach here. S&P raised China to AA from A+ in 2010 and it is still at the same level in spite of clear growth pangs in the Chinese economy. It scaled down India from BBB+ to BBB- in 2012 and remains stuck there despite clear signs of growth in the Indian economy that has made it the world’s fastest growing economy.
So, it is not about jealousy and dissatisfaction. It’s about a dignified, rightful treatment.
Unlike other emerging economies, India has an unique position. While others are struggling, fundamentals of India’s economy remain sound. And it is too big to fail or to be taken lightly. India is the world’s third largest economy in terms of purchasing power parity and the only bright spot, by all assessments, to drive the world’s growth in coming years, especially after China is slowing down. So there has to be this inevitable comparison. When it was so in heydays of the Chinese economy, then why not the same yardstick for India. India or Indian media didn’t rush to ridicule or mock or criticise China when the whole world was looking at its miraculous growth.
India’s economic adviser gave expression to some valid concerns, slamming the credit rating agencies with his ‘come back to assess us after half a century’ jibe. India has been raising questions on the rating mechanisms used by the credit rating agencies for quite some time. After Subramanian’s dig at S&P, in another move, questioning the criteria used by the rating agencies, Indian government has now asked Fitch to explain its rating methodology.