India is now the worst country, in terms of credit ratings, among all the countries that make up “Emerging Asia”, according to rating agency Fitch.
In simple terms, this means that if you are a global lender, wanting to lend some money to countries, then Fitch feels Mongolia or even Sri Lanka stand a better chance of repaying your principal and interest than India! And the developed Asian countries — Australia, Japan, Singapore, Hong Kong and New Zeakland — are, of course, in a completely different league altogether.
Here is where India stands:
|Source: Fitch Ratings (Asia-Pacific Sovereign Credit Overview, dated September 6, 2012)|
India, as you will notice, is at the bottom of the heap with a “BBB-” rating. The only other country with a similar rating is Indonesia, but it’s outlook is “Stable” and hence better than India’s “Negative”. So, overall, that puts India behind Indonesia and at the bottom of the league tables.
There’s now a suggestion among some of the global economistas and commentators that Indonesia should replace India as the “I” in BRICS.
Okay, granted that credit rating agencies are not exactly paragons of virtue or prescient in predicting value destruction. Examples abound: the sub-prime loan crisis is the best example. So, are the ratings given to Greece, Spain or Italy just before they went bust! While you may or may not agree with this rating, it is a subject for another debate. But, that still doesn’t take away from the central point that we’re up shit creek without a paddle? Fitch just added another hole to this wobbly boat!