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Why Does India Have a Poor Credit Rating?

India is one of the fastest growing economies in the world, but it has a poor credit rating. This means that India has to pay more interest on its bonds. The video discusses why India has a poor credit rating and what the Indian government is doing about it.

 

Credit Rating Agencies and India

Credit rating agencies are companies that assess the creditworthiness of countries and companies. They issue credit ratings, which are opinions about how likely a borrower is to default on their loans.

 

Credit rating agencies base their ratings on a mix of quantitative and qualitative factors. Quantitative factors are based on data, such as a country’s GDP growth rate and budget deficit. Qualitative factors are based on expert opinions, such as the political stability of a country and the strength of its institutions.

 

The speaker in the video argues that credit rating agencies are discriminating against India. Even though India has a strong economy, credit rating agencies give India a low credit rating. This is because the qualitative factors are biased against India.

 

How Credit Rating Agencies Affect India

A poor credit rating can make it more expensive for a country to borrow money. This is because investors are more likely to demand a higher interest rate on bonds issued by a country with a poor credit rating.

 

A poor credit rating can also damage a country’s reputation. It can make it more difficult for a country to attract foreign investment.

 

What is the Indian Government Doing?

The Indian government is pushing back against credit rating agencies and is asking them to change their methodology. The government argues that the current methodology is biased against India.

 

The Indian government is also working to improve India’s credit rating. This includes reducing the budget deficit and improving the country’s infrastructure.

 

Conclusion

The speaker in the video hopes that credit rating agencies will change their perception of India. If India can improve its credit rating, it will be able to borrow money more cheaply and attract more foreign investment. This will help India to continue to grow its economy.

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