FinMin to raise concerns with S&P

The finance ministry today questioned the methodology followed by rating agency Standard & Poor’s (S&P) in assigning credit ratings. It said it would raise the matter with the agency soon.

On S&P’s indication that India could be the first among Brazil, Russia, India and China (BRIC nations) to lose its investment-grade rating, Economic Affairs Secretary R Gopalan said the process the agency followed in assigning ratings was not very transparent. He added this was made known to S&P when officials from that organisation visited India in April.

“We asked them ‘why do you take so many details and decide on ratings based on only one or two aspects?’ We also asked them to share the result of their exercise before taking a final call on the rating. But they did not do that,” he said, adding the rating agency was asked why the country was clubbed with countries whose attributes were lower than India’s. “We don’t seem to have very transparent answers on the queries we raised,” he said.

He stressed there was a need to engage with credit rating agencies continuously to appraise them of ground realities. “We will have a conference call soon. We will explain how we are much better off in many aspects, compared to what they think. And, on some of the challenges they mentioned, we will also explain how we would be in a position to meet those,” he said.

Pronab Sen, principal advisor to the Planning Commission, said rating agencies should not dictate policies to governments. “The government of India, or for that matter the US, knows what is wrong with the economy and what is to be done. It doesn’t need the advice of an independent rating agency. S&P dictating policy is totally unacceptable,” he said.