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.
©SantoshChaubey