WASHINGTON — As global investors reassess economic risk in an evolving financial landscape, India is positioning itself to challenge long-standing norms in sovereign credit ratings and question perceived inconsistencies in how countries are evaluated, according to Care Ratings Limited Managing Director and Group CEO Mehul Pandya.
Speaking during the Spring Meetings of the International Monetary Fund and the World Bank, Pandya said India’s large and distinctive domestic ratings market provides a strong foundation for expanding its presence globally.
In an interview at IMF headquarters, Pandya described India as “one of the largest rating markets globally,” noting that unlike many countries, India rates not only bonds but also a significant share of bank debt. The system spans large corporations, government entities, mid-sized firms, and small and medium enterprises, creating what he called “a very unique market.”
That scale, he said, is enabling Care Ratings to grow internationally. The firm is already “a part of the global top 10” at the group level and has expanded its sovereign global-scale ratings to cover 45 countries in roughly 18 months, ranking “number four in terms of the number of countries which are getting covered.”
Pandya argued that India’s relatively late entry into the global ratings space reflects hesitation rather than a lack of capability.
“There was no reason why a country, which is the fourth largest economy globally should not be having a rating agency… in the global scale rating space,” he said, emphasizing the need for “conviction, confidence as well as determination.”
He acknowledged that established global players have been slow to accept new entrants, describing a progression from initial skepticism to eventual recognition.
“The first challenge… is in terms of the acknowledgement itself,” Pandya said, adding that reactions often move from “disdainful… neglect” to “grudging acknowledgement” before broader acceptance.
He pointed to shifting dynamics after Care Ratings established global operations in Gujarat International Finance Tec-City, or GIFT City, noting that other agencies subsequently sought similar regulatory presence.
“The moment there is a serious player… there has to be an acknowledgement over a period of time,” he said.
Pandya also raised concerns about perceived inconsistencies in sovereign credit ratings. He noted that India’s most recent rating upgrade came “almost after two decades,” despite what he described as sufficient earlier triggers.
“It is for the rating agencies to explain… why those triggers were not factored in… and why now,” he said.
Drawing comparisons with Greece, which has experienced past defaults but has seen rating improvements, Pandya questioned whether different standards are being applied.
India, he noted, “did not default” even during the 1991 balance of payments crisis.
Such comparisons, he said, “raise questions as to why different approach for one country and… another.”
He attributed part of the issue to subjectivity in rating methodologies.
“The moment there is a significant reliance… on subjective parameters… there… could be a tendency… to justify an outcome,” he said.
Care Ratings is working to reduce that subjectivity by increasing transparency so that both issuers and investors better understand how ratings are determined.
Pandya said artificial intelligence is playing a growing role in the process, particularly in aggregating and validating data from sources such as multilateral institutions, finance ministries, and central banks. However, final decisions remain driven by human judgment.
“It’ll never be substituting the human intelligence… it’s a view of the committee which prevails,” he said.
Looking ahead, the company plans to focus on expanding its presence in emerging markets while building stronger outreach in advanced economies, where much of global capital originates.
The long-term goal, Pandya said, is to establish a presence “in every single economy, which matters,” though he acknowledged expansion would be gradual.
Global credit rating agencies play a critical role in shaping investor sentiment and influencing borrowing costs for both governments and corporations, particularly in emerging markets seeking foreign investment. (Source: IANS)
