Mend your nation-judging ways, CEA tells rating firms

India's credit rating is at the lowest investment grade despite improved economic metrics

- Rhik Kundu

Credit rating agencies need to reform their sovereign rating process to correctly reflect the default risk of developing economies, saving billions in funding costs, the government’s chief economic adviser, V Anantha Nageswaran, said on Thursday.

His comments coincide with India seeking an upgrade to its sovereign credit rating, currently at the lowest possible investment grade, as the South Asian nation has seen its economic metrics improve considerably since the pandemic.

In a document titled Re-examining Narratives: A Collection of Essays, published by the CEA's office, Nageswaran said the enormous degree of opaqueness in credit rating methodologies makes it challenging to quantify the impact of qualitative factors on credit ratings.