Modi calls for BRICS-CRA

By Shivam Saklani

At Xiamen, the port city of China, Prime Minister Narendra Modi, today strongly pitched for early setting up of BRICS-Credit Rating Agency.

Addressing the heads of the world’s top 5 fastest growing economies (B: Brazil, R: Russia, I: India, C: China, S: South Africa), here at Xiamen, PM Modi asserted that a separate rating agency would help the economies of the member countries as well as other developing nations.

The idea initially emerged in 2015 BRICS Summit in Ufa (Russia) and was affirmed by Goa declaration at 8^th BRICS Summit.

The aim behind the idea of having separate credit rating agency is to have a more “balanced view” when ratings are made.

Standard and Poor, Moody’s and Fitch or as they are collectively called “The Big 3” have faced increasing criticism. The BRICS Leaders have claimed that the frequent “down grading” of developing countries are unjust and severe western political interests.

Both Brazil and Russia have recently been “downgraded” by Moody’s. For over a year South Africa is said to be on the verge of a “possible downgrade”. K.V Kamath had also expressed concerns over methodologies of the “Big 3” global agencies saying that these are constraining growth in emerging nations the ratings of multilateral banks like BRICS-New Development Bank are affected due to parent countries’ ranking and ratings, which eventually hampers the liquidity help which NDB provides to parent countries with regard to payment pressures.

The call from India came at a very crucial point, when the nation’s growth rate is 5.7, given that BRICS is home to half the world’s population and accounts for more than a quarter of the world’s economic output and New Development Bank surely has the capacity to establish an influential credit rating institution. It would be very interesting to see, how the BRICS credit rating agency would present itself as a competition before “The Big 3”.