NEW DELHI: After the BRICS Bank, the five-member bloc of emerging nations is considering setting up a credit ratings firm in its efforts to challenge western hegemony in the world of finance. The credit rating agency for emerging markets, as it is tentatively called, is likely to take shape at the BRICS Summit to be hosted by India in October. The idea of a non-western ratings firm for the emerging markets has been in discussion among the leaders of the BRICS nations — Brazil, Russia, India, China and South Africa — for the past few years, said officials with knowledge of the plan.
Another proposal to be taken up during India’s presidency at the BRICS is setting up of the NDB Institute in India to research on and identify projects for utilising the $100 billion that the New Development Bank (NDB) formed by the BRICS nations has in its disposal. The big three — Moody’s, Fitch and Standard & Poor’s — together account for 90% of the global ratings market. The criteria used by them for rating emerging economies has often come under critical evaluation, these officials said.
Emerging economies claim that western ratings firms are biased, optimistic on developed nations and pessimistic on the developing ones. Russia in particular and China have been perturbed by the western ratings firms. Russia alleges that the western firms had deliberately lowered Moscow’s rating after the Ukraine crisis.
Sources here said a BRICS ratings firm could also assist other emerging New Delhi: After the BRICS Bank, the five-member bloc of emerging nations is considering setting up a credit ratings firm in its efforts to challenge western hegemony in the world of finance. The credit rating agency for emerging markets, as it is tentatively called, is likely to take shape at the BRICS Summit to be hosted by India in October. The idea of a non-western ratings firm for the emerging markets has been in discussion among the leaders of the BRICS nations — Brazil, Russia, India, China and South Africa — for the past few years, said officials with knowledge of the plan.
Another proposal to be taken up during India’s presidency at the BRICS is setting up of the NDB Institute in India to research on and identify projects for utilising the $100 billion that the New Development Bank (NDB) formed by the BRICS nations has in its disposal. The big three — Moody’s, Fitch and Standard & Poor’s — together account for 90% of the global ratings market. The criteria used by them for rating emerging economies has often come under critical evaluation, these officials said. Emerging economies claim that western ratings firms are biased, optimistic on developed nations and pessimistic on the developing ones. Russia in particular and China have been perturbed by the western ratings firms. Russia alleges that the western firms had deliberately lowered Moscow’s rating after the Ukraine crisis.
Sources here said a BRICS ratings firm could also assist other emerging will be able to rate infrastructure and sustainable projects in the emerging economies. The Asian Development Bank estimates that in the next decade, Asian countries will need $8 trillion in infrastructure investments to maintain current economic growth rates. India’s Narendra Modi government is desperate to boost the country’s infrastructure and has created National Infrastructure Investment Fund (NIIF) where fund rich UAE is putting funds. And the Prime Minister’s trip to Qatar early June en route to the US might see Doha also putting in some investments in NIIF. Creation of NDB, the BRICS Bank, was India’s brainchild.