India vs Global Rating Agencies: A Decade-Long Dispute Over Fairness
Speaking at a business conference in London last week, Commerce Minister Piyush Goyal criticised global sovereign credit rating agencies for their methodologies, calling them 'unfair to India'. He praised domestic agency CareEdge Ratings for being 'objective'. This is not the first time the Indian government has raised concerns about these agencies. The Hindu examines the issues.
What do rating agencies measure?
India is rated by seven international agencies: Standard & Poor’s (S&P), Moody’s, Morningstar DBRS, Fitch, Japanese Credit Rating Agency (JCRA), Rating and Investment Information (R&I), and CareEdge. The three most recognised are S&P, Fitch, and Moody’s. Their core role is to assess an entity’s ability and willingness to repay debt. Ratings are assigned on an alphabetical scale, with AAA being the highest and D indicating default. These ratings determine borrowing costs: higher ratings mean lower interest rates.
‘Ability’ and ‘willingness’ are distinct metrics. Ability is quantitative, based on hard economic data. Willingness is qualitative and subjective, relying on opinion.
India’s ratings so far
India has consistently been rated at the lowest investment-grade level—just one or two notches above 'junk' status. S&P upgraded India to BBB in August 2025 after 18 years. Moody’s upgraded to Baa2 in 2017 after 13 years. Other upgrades in 2025 came from R&I (to BBB+) and Morningstar DBRS (to BBB).
India’s grievances
Despite upgrades, India remains barely above junk. Mr. Goyal argued that agencies 'haven't recognised the India growth story, strong fundamentals, and sovereign capabilities'. Finance Minister Nirmala Sitharaman has echoed this, calling for reform of rating methodologies. The Economic Survey 2020-21, authored by then Chief Economic Adviser Krishnamurthy Subramanian, dedicated a chapter to this, noting it was unprecedented for the world’s fifth-largest economy to have such a low rating.
Critics point out that willingness to repay is subjective and may penalise countries like India despite strong economic performance. The government maintains that rating agencies rely on outdated models that fail to capture India’s potential.
