Reforming the rating agencies

Restoring their credibility is crucial in order to make the world a fairer and flatter place

Emerging market and developing economies (EMDEs) are meted out unfair treatment by the credit rating agencies. India is no exception.

A UN paper shows that the sovereign credit ratings assignments are influenced both by hard economic data and subjective judgements, resulting in a bias in favour of the advanced economies. The EMDEs perennially receive ratings below what ought to be dictated by their economic performance and resilience.  

The paper attributes the bias to the location and origin of the staff of the credit rating agencies. The headquarters of credit rating agencies are located in the US. This itself contributes to