India and Russia today vowed to develop a credit rating industry that is "independent from political conjecture" -- a move that follows apprehensions about global agencies being biased towards large economies like the US and China.

In a joint declaration, Prime Minister Narendra Modi and Russian President Vladimir Putin also said they would also explore harmonisation of the respective laws in the two countries regarding credit ratings.

The move assumes significance in the wake of several commentators and policy makers in India raising concerns that the global rating agencies have not been upgrading India's sovereign credit rating despite its improving economic and political fundamentals, even as China was viewed favourably by the same agencies.

Globally, there are a handful of rating agencies and most of them are headquartered in the US. Most of the agencies including Fitch, S&P and Moody's have given India the lowest investment grade rating -- just a notch above the junk grade.

"We will coordinate our positions in order to develop a credit rating industry that is transparent for the market participants and independent from political conjecture.

"In this sense we support work aimed at exploring the opportunities of harmonisation of our legislation in the area of credit ratings, as well as recognition of ratings of our local credit rating agencies," the declaration said.

India continues to be rated 'BBB-' -- just a notch above the junk grade and lowest among investment grade ratings -- by most of the global credit rating agencies despite the government pitching hard for an upgrade on the basis of several reforms initiated over the last few years.

Some commentators have also raised questions about the methodologies adopted by the rating agencies, even as they have been defending their views and have ruled out any upgrade in the immediate future.

Taking a dig at rating agencies, Chief Economic Advisor Arvind Subramanian went on to write a piece in this year's Economic Survey with a headline 'Poor Standards? The Rating Agencies, China and India' -- an apparent reference to the leading agency Standard and Poor's.

He also wrote that the role of ratings agencies has increasingly come into question in recent years.

"In the US financial crisis, questions were raised about their role in certifying as AAA bundles of mortgage-backed securities that had toxic underlying assets. Similarly, their value has been questioned in light of their failure to provide warnings in advance of financial crises - often downgrades have occurred post facto, a case of closing the stable doors after the horses have bolted," he wrote.

Subramanian said S&P in November 2016 had ruled out the scope for an upgrade for India for some considerable period, mainly on the grounds of its low per capita GDP and relatively high fiscal deficit.

Former RBI Governor Bimal Jalan also last month pitched for a rating upgrade for India due to a number of steps taken by the government.

Asked why India was being denied a rating upgrade even as growth and fundamentals have improved, Jalan said the country's rating must be upgraded by global rating agencies because of a number of measures taken by the Modi government.

Recently, Fitch cited weak fiscal position to keep India's sovereign rating unchanged at 'BBB-', the lowest investment grade with stable outlook assigned to the country more than a decade ago.

Critical of rating agencies for giving India the lowest investment grade rating, eminent banker Deepak Parekh also wondered how a country with such "strong fundamentals" on both economic and political fronts can be rated so low.

"Why is India, the fastest growing emerging economy for over one year now with all macroeconomic fundamentals being positive, rated just BBB-?

"On the other hand, Italy and Spain, which are far weaker and smaller, are having much higher ratings than us," Parekh said recently.

"Italian banks are in far worse shape than our banks.

Italian government is more shaky and we have a solid political stability now," he said, while adding that a credit rating is supposed to be based on both economic and political factors.