Sovereign ratings, the minister said in Washington DC, must reflect macro fundamentals of emerging market and developing economies, their cost of capital and ability to draw private investments.
Sitharaman was speaking at the plenary session of the International Monetary and Financial Committee during the annual meetings of the International Monetary Fund and the World Bank Group, according to a finance ministry post on microblogging site X.
Experts and senior government officials have often called out global rating agencies for their perceived bias against emerging economies and for handing them a raw deal.
S&P, Moody’s and Fitch have maintained their sovereign ratings for India at the lowest investment grade, even though the country remains the world’s fastest-growing major economy since 2021-22 and is forecast by the IMF to retain the status at least until 2025-26.
In fact, the IMF’s projected growth rates for India—of 7% this fiscal and 6.5% the next—are more than double the global averages. No sector in India is off-limits for private investors, the minister said separately at the Centre for Strategic and International Studies in the US capital, highlighting the entry of private players even in sensitive sectors, such as defence production and space. Under Prime Minister Narendra Modi, the licence raj of the socialist era is well behind us and the red tape has now been converted into red carpet for investors, she added.
What’s holding global investors back?’ Highlighting India’s strong growth opportunities, Sitharaman pitched for more investments by global entities. “I want to ask where are the investable funds, where are the global investors, what are they looking at? What’s holding them back? So that’s a question I like to pose,” she said at the CSIS.
An “appreciable” amount of FDI, she stressed, is very much flowing into India. “But with that coming, I still would think there’s more opportunity lying. And with all the conversation being China-plus one, shared values, democracies, English speaking, demographic dividend, with skill sets of Indian youth being so good that they are manning the GCCs (global capability centres)… So the question would be: What’s holding them back?” she asked.
Meanwhile, nothing is holding the Indian economy back, she stressed. “The policies are working. Reforms are still happening and it shall continue to happen. Greater liberalisation of the economy will be there,” she said.
SOFT LANDING FOR GLOBAL ECONOMY
Sitharaman said there is a heightened possibility of a soft-landing for the global economy, which has undergone tremendous stress over the past several years. She expected better days ahead due to coordinated actions between countries and multilateral financial institutions. The minister, however, cautioned against undue optimism, saying many economies are not really picking up and the global trade scenario is far from robust.
