The Economic Survey

Has slammed credit rating companies for their inconsistency in making projections and criticized the methodologies adopted by them. It is also critical of the differential treatment they showed towards India and China while assigning a rating.

Quoting an example, the Survey noted that China had launched a massive credit expansion in 2009, resulting in the rise of its credit-GDP ratio by about 63 percentage points of the GDP. But growth in GDP slowed from over 10% .

The Survey has criticized the rating agencies’ failure to anticipate the slowdown and the risks associated with it.

In December 2010, rating agencies raised China’s rating from A+ to AA- and it has never adjusted it since, even as the credit boom unfolded and growth experienced a decline.

In contrast, India’s ratings has remained stuck at a much lower level of BBB-, despite the country’s dramatic improvement in growth and macro-economic stability since 2014. “These contrasting experiences raise a question: can they really be explained by an economically sound methodology,”

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