<p>The Economic Survey 2016-17 questioned the methodology of credit rating agencies while assessing different countries. <br /><br /></p>.<p>“If per capita GDP is a key to upgrading sovereign ratings as suggested by Standard and Poor’s while maintaining a status quo on India in Novemeber 2016, then poorer countries might be provoked into saying, please do not bother this year, come back to assess after half a century,” the survey’s author Arvind Subramanian told reporters, explaining the contrast in rating behaviour.<br /><br />In 2009, China launched a historic credit expansion, which has so far seen the credit-GDP ratio rise by an unprecedented about 63 percentage points of GDP, much larger than the stock of India’s credit-GDP. At the same time, Chinese growth has slowed from over 10% to 6.5%, the survey said, asking, “How did Standard and Poor’s react to this ominous scissors pattern, which has universally been acknowledged as posing serious risks to China and indeed the world?”<br /><br />“These contrasting experiences raise a question: can they really be explained by an economically sound methodology,” he said.</p>
<p>The Economic Survey 2016-17 questioned the methodology of credit rating agencies while assessing different countries. <br /><br /></p>.<p>“If per capita GDP is a key to upgrading sovereign ratings as suggested by Standard and Poor’s while maintaining a status quo on India in Novemeber 2016, then poorer countries might be provoked into saying, please do not bother this year, come back to assess after half a century,” the survey’s author Arvind Subramanian told reporters, explaining the contrast in rating behaviour.<br /><br />In 2009, China launched a historic credit expansion, which has so far seen the credit-GDP ratio rise by an unprecedented about 63 percentage points of GDP, much larger than the stock of India’s credit-GDP. At the same time, Chinese growth has slowed from over 10% to 6.5%, the survey said, asking, “How did Standard and Poor’s react to this ominous scissors pattern, which has universally been acknowledged as posing serious risks to China and indeed the world?”<br /><br />“These contrasting experiences raise a question: can they really be explained by an economically sound methodology,” he said.</p>