CRIS index

Chief Economic Advisor Kaushik Basu  announced in January 2012 that a new Index of Sovereign Credit Rating called Comparative Rating Index of Sovereigns, CRIS. CRIS is a relative rating of sovereign debt based on the historical evolution of their ratings over five years. Computation of CRIS is based on well known rating agency- Moody’s ratings and data on the GDPs of different nations released by the International Monetary Fund.

This CRIS index has been developed by the Finance Ministry for comparison of various countries’ sovereign ratings using Moody’s ratings. Some findings Mr. Basu has disclosed are as follows:

  • The recent index says that Investment prospects in India have improved in the past five years . India’s score has risen from 66.47 in 2007 to 69.83 in 2011.
  • In other words, in relative terms, India has become a better investment destination by 5.06%.
  • India’s rank in terms of CRIS moved up from 61st position in 2007 to 55th in 2011. The improved score is partly due to the decline in scores of some European nations, leading to deterioration of the world average by over 4.8%.
  • The index is based on the ratings of global agency Moody’s and data on the GDPs of 101 nations given by the IMF.
  • Going forward, the ratings of other major rating agencies like S&P and Fitch might be used for CRIS.
  • Paraguay, Indonesia and Peru were the countries that registered the maximum increase in their ratings between 2007 and 2011, as per CRIS, while Portugal, Ireland and Pakistan witnessed the biggest fall in the index.
  • The index uses external data on GDP and ratings combined in terms of pure mathematical and statistical methods without interventions or interpretations.

The formula used for calculating CRIS would be made public at a later stage. Kaushik Basu said that “we did some research… We believe we are the first [to develop such an index]."