Credit rating agencies need to review their structure

New Delhi: Chief Economic Advisor V. Ananth Nageswaran said credit rating agencies need to review the rating framework. Rating agencies play an important role in the funding of the country. The rating influence of these agencies varies from country to country and has a direct impact on financial institutions.

On this issue, he said, 'They (rating agencies) exaggerated the 2008 crisis and there was direct evidence of it. These agencies collectively made misassessments and then unitedly downgraded (countries).

Rating agencies downgrade a country when its fundamental condition has already deteriorated and requires reconstruction. The interests of global financial institutions and their clients have a significant impact on developing economies. Therefore, countries should tailor their monetary policies to their domestic economies.

It is very difficult to estimate the impact of an economic recession from global trade volumes. Global trade volumes may also be affected by restrictions such as tariffs and non-tariffs.

Countries are shifting supply chains to less risky countries and manufacturing products and shipping them back to the country of origin. All this is happening. Therefore, it is difficult to conclude on the basis of business data that the economy is being adversely affected. Freeing economies from China's supply risk is a long process.