India Questions S&P's 'Inconsistent' Standards, Citing China
Yicai Global
/SOURCE : Yicai
India Questions S&P's 'Inconsistent' Standards, Citing China

(Yicai Global) Feb. 3 -- India's finance ministry has criticized global ratings agency Standard & Poor's Financial Services LLC for following "inconsistent" standards in evaluating its and China's economies, according to Indian media reports.

S&P upgraded China in 2010 despite its slowing economic growth and rising debt, while India's rating has remained stuck at a much lower level despite dramatic improvement in growth and economic stability, the ministry's pre-budget annual Economic Survey 2017 said.

Arvind Subramanian, chief economic adviser to the Indian government, complained that the US-based ratings agency is following "inconsistent" standards.

"We call these poor standards because S&P said last year that there is no way they could upgrade India because of GDP and fiscal deficit," the Indian Express newspaper quoted Subramanian as saying.

On Jan. 31, the Financial Express newspaper compared China and India in terms of economic growth, fiscal deficits and other aspects, citing the Economic Survey. Between 2009 and 2015, China's debt-to-GDP ratio surged by 63 percentage points to 205 percent from 142 percent, much higher than that of India, the survey said.

At the same time, Chinese growth slowed from over 10 percent to 6.5 percent. In 2010, despite China's rising debt and economic slowdown, S&P increased China's sovereign credit rating from A+ to AA- and has never adjusted it since.

In contrast, India's economic growth and macro economic stability have substantially improved since 2014 and the economy has shown robust growth momentum, despite difficulties faced by emerging markets. India has also made fiscal discipline commitments in the past three years, meaning the country's fiscal deficits and debt levels will fall significantly over the coming years. Nevertheless, India's ratings have remained stuck at the much lower level of BBB-.

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