Page 114 - ES 2020-21_Volume-1-2 [28-01-21]
P. 114
Does India’s Sovereign Credit Rating reflect its fundamentals No! 97
Figure 19: Sovereign Credit Figure 20: Sovereign Credit
Ratings and General Government Ratings and Cyclically Adjusted Primary
Gross Debt (per cent of GDP) Balance (per cent of Potential GDP)
7 7
6 5 6 5
Average rating (1=BBB−/Baa3 to 6=A+/A1) Ordinal scale 4 3 Average rating (1=BBB−/Baa3 to 6=A+/A1) Ordinal scale 4 3
2
2015 2010 2 2010 2020
1 1 2015
2020 2005
2005 2000
0 0
2000
−10 −5 0
0 50 100 150 200 Cyclically Adjusted Primary Balance (% Potential GDP)
General Govt. Gross Debt (% GDP)
Source: Bloomberg, Datastream and IMF Source: Bloomberg, Datastream and IMF
Note: Red shows India's rating during 2000-20 Note: Red shows India's rating during 2000-20
3.22 Figure 20 shows that within its sovereign credit ratings cohort, India has consistently been
rated much below expectation for its level of cyclically adjusted primary balance (per cent of
potential GDP) and has been a negative outlier throughout the period 2000-20.
3.23 During 2000-20, India has consistently been a negative outlier, rated much below
expectation for its level of current accent balance (per cent of GDP) within its sovereign credit
ratings cohort (Figure 21).
Figure 21: Sovereign Credit Ratings Figure 22: Sovereign Credit Ratings and
and Current Account Balance Investor Protection (Business Extent of
(per cent of GDP) Disclosure Index)
7 7
6 5 6 5
Average rating (1=BBB−/Baa3 to 6=A+/A1) Ordinal scale 4 3 Average rating (1=BBB−/Baa3 to 6=A+/A1) Ordinal scale 4 3
2
2010 2
1 1
2015 2020 2010 2015 2020
2005 2005
0 0
2000
−10 0 10 20 2.5 5.0 7.5 10.0
Current Account Balance (% GDP) Business Disclosures Index
Source: Bloomberg, Datastream and IMF Source: Bloomberg, Datastream and World Bank
Note: Red shows India's rating during 2000-20 Note: Red shows India's rating during 2005-20
3.24 Figure 22 shows that within its sovereign credit ratings cohort, India has consistently
been rated much below expectation for its level of investor protection, as measured through
