India Joins Countries Attacking Rating Agencies

June 20, 2012 by · Leave a Comment
Filed under: International, S&P, The Rating Agencies 

The long list of countries lashing out at rating agencies for lowering sovereign debt ratings has gotten longer. Now India has joined most of the EU and many others in criticizing Standard & Poor’s (S&P). India’s complaint centers around an S&P report saying that their country could be the first BRIC (Brazil, Russia India and China) country to loose its investment grade rating.

The Business Standard quotes Union Home Minister P. Chidambaram as dismissing the report by saying, “I think we tend to overreact to rating, as you see in reports. In fact, some of these rating agencies have very poor records in the past. I think we need not see reports of rating agencies as the final word on the country’s economy.”

Mr. Chidambaram supported his position by pointing out how India survived the challenge they faced in 1991 and again during the Asian domestic crises in 1997. Today’s challenges, he believes, pale in comparison.

He agreed that inflation was too high, but blamed the problem on high fuel prices. The Business Standard has him explaining, “High crude oil prices are fuelling the price rise compounded by the fiscal deficit and the current account deficit. We have controlled inflation. We believe crude oil prices will moderate in coming months and gradually, inflation will come down.”

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