Moody’s, the global rating agency, has been fined in the US, in Europe and in Hong Kong for ‘rating fraud’, and all during the last year and a half. Regulators in the United States, Europe and in Hong Kong questioned the integrity of the process and imposed heavy fines on the agency.

In January, 2017 Moody’s agreed to pay a fine of 864 million US Dollars ( approximately 550 Crore INR) to escape criminal action for its inflated rating of banks and securities in the run up to the sub-prime crisis of 2008.

In June, 2017 Europe’s markets watchdog imposed a penalty of 1.24 million Euros on Moody’s for “not adhering to the correct rating protocol”

In April, 2016 a Hong Kong tribunal upheld a penalty of 1.4 million HK Dollars on Moody’s Financial Service for similar reasons.

US Justice Department had said in a statement in January, “Moody’s failed to adhere to its own credit-rating standards and fell short on its pledge of transparency in the run-up to the ‘great recession’.”

Moody’s , it had said, was fined for issuing false credit ratings that eventually led to the market crash. A probe found that Moody’s issued high ratings to sub-prime home loans, which later collapsed in 2007. Credit ratings firms gave out top grades to junk deals, in order to secure business from the banks.

S&P Global’s Standard & Poor’s had also paid a penalty in 2015 of $1.375 billion US Dollars. Standard and Poor’s is the world’s largest ratings firm, followed by Moody’s.

While the Prime Minister and Mr Jaitley are understandably elated at the rating upgradation by Moody’s, most observers and experts have serious reservations. The Washington Post has carried a report under the headline : “Upbeat Moody’s misses the mark on India”.

The Post went on to comment, “Moody’s upgrade is a denial of the current state of the Indian economy. It acknowledges that government debt, at 68% of GDP, is higher than similarly rated peers’—but asserts that “reforms offer greater confidence” that it will remain stable. It notes the disruption and the hit to growth caused by the Modi overhauls, but argues that the positive impacts will be seen in time. That, however, merely raises the question, Why upgrade now? Why not wait for signs—however nascent—that the measures are actually effective?”