India ratings are unfair, says Union Finance Secretary

India’s debt-to-GDP better than of U.S., says T.V. Somanathan

Finance Secretary T.V. Somanathan hit out at global rating agencies’ comments about India being the most indebted emerging market and about the lack of clarity on a fiscal consolidation path in the Union Budget, arguing they appeared to adopt ‘double standards’ in their assessments of emerging economies and developed markets.

“I say this with a sense of seriousness and responsibility, not in a flippant way, that rating agencies do have double standards between emerging and non-emerging countries. Fitch [Ratings] has said that we have one of the highest debt-to-GDP ratios in emerging market countries,” Mr. Somanathan said, asserting that India had ‘one of the best’ debt-to-GDP ratios when compared with higher-rated countries.

“Our debt-to-GDP ratio is far lower than the United States, Japan, and other such highly-rated countries in Europe. Our denominator in terms of GDP has a natural tendency, even in the worst of times, to grow faster than those AAA-rated countries. Even if you forget India’s inherent fundamentals and go by pure mathematics, with a nominal growth rate of 10% to 12% and a 4% inflation rate, our deficits are far less worrying than some of the deficits of much higher-rated countries,” the Finance Secretary told The Hindu.