In A First, Indian Rating Agency Set To Assign Sovereign Ratings To The Rest Of The World

In a first, an Indian agency is set to begin assigning sovereign ratings to the countries of the world by 2023 end.

CareEdge Ratings, one of India's leading rating agency, on Monday (7 August) launched the Sovereign Risk Assessment Framework, which will assess countries based on five key pillars namely, economic structure, fiscal strength, external linkages, monetary and financial stability, and institutions and quality of governance.

Speaking at the launch of the Sovereign Risk Assessment framework, Sanjeev Sanyal, Member of the Economic Advisory Council to the Prime Minister, said “With the growing importance of emerging economies in the global landscape, it is important to better understand the nuances of these countries while doing the sovereign credit assessment".

"I am glad that CareEdge, one of the leading rating agencies of India has come up with a comprehensive framework for sovereign risk assessment. The purpose of any sovereign risk assessment should be the ability to accurately assess the credit worthiness of the country and I believe that CareEdge with its vast experience in the ratings business is well poised to take up this challenge," he said.

Sanyal further said that India should no longer be bound by benchmarks that are decided by third parties, and in which the country has no role in framing.

"For the very first time, an Indian rating agency will assign sovereign ratings to the rest of the world... This is an important thing for us as a rising economic power to get used to doing. All this while, we allowed other people to deconstruct us; it's time we get confident enough to deconstruct the rest of the world on our terms," Sanyal said, reports news agency PTI.

The EAC-PM member further said that India also needs to come up with global norms in various other fields like medical benchmarks and Environmental, Social & Governance (ESG) standards.

"Our political leadership is visible...but we need to begin to create more institutional systems... like our own ESG norms, sovereign ratings, global benchmarks for technology and regulations," Sanyal was quoted as saying by news agency PTI.

According to the report, the agency is expected to begin releasing sovereign ratings of individual countries by the end of 2023, after due statutory approvals.

"You can critique the methodology, and the world can look at it and tell us where we can improve... And over time, it will hopefully get adopted by the global community; in a sense we will have an important say in the way the world sees itself," Sanyal said.