India has been hard pressing for a rating upgrade from international agencies but this requests is falling on deaf ears. Fed up – India have finally started asking for a detailed rationale behind such rating processes. Just compare this with China’s credit rating that was upgraded from A+ to AA- in December 2010 while India’s remains unchanged at BBB-. From 2009 to 2015, China’s credit-to-GDP soared from about 142% to 205% and its growth decelerated. The contrast with India’s indicators is striking. Still we have to beg for a rating upgrade. WHY?

The answer to this might lie in the secret of Massive International Investments getting locked in China as FDI investments. And plausible, these investors are the ones exercising influences in the rating rationale. It somehow seems so hollow, that principally these investors should follow the ratings but it is the ratings that follow the investments… “The cart before the horse!” God save the investing community…

Mr. Ruchir Sharma – the famous economist / fund manager & celebrity author has mentioned in his recent book “The Rise and Fall of Nations” that it will be surprising to see how China is able to steer its economy under such a massive debt profile. However, he has little hope and what surprises him more is the fact that most of the Portfolio managers around the world refuse to accept that such investments might not be recoverable.

India on the other hand has shown massive structural reforms under the new leadership. The present fundamentals – be it Fiscal deficit, the Inflation index, the Foreign exchange reserves and the GDP growth rate are the best in recorded history of Indian economics. The tax to GDP ratio is set to improve drastically with the recent demonetization and with “One Tax” getting introduced soon – the way seems to be only looking north for the Indian economy. Still we seem to not attract the rating agencies worldwide…WHY – simply because the FDI into India v/s China is insignificant as to warrant a look…

India might have read things wrongly – what comes first – the rating or the FDI?