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The sovereign rating by a global credit rating agency has a say in currency transactions, and a downgrade will affect the nation's currency, said a senior industry official, indicating the need for a non-western credit rating agency.

Speaking to IANS on the condition of anonymity, the official said: "There is a perception that the western credit rating agencies have a slight bias in their sovereign rating of India."

According to the official, the credit rating agencies that rate the countries also take into account the per capita income in dollar terms and legal framework -- for commercial transactions, debt resolutions and others -- that exists in the rated countries.

While agreeing that these need some improvements in India, the official noted that the sovereign credit raters do not take into account the country's services economy, the economic depth, infrastructure spending, and forex reserves.

The official also added that most of India's borrowings are rupee debts, unlike many other countries that have their debts in dollars.

This brings to the question is there a need for a non-western credit rating agency?

Already an idea has been mooted for a BRICS (Brazil, Russia, India, China and South Africa) credit rating agency. Currently, the sovereign rating market is dominated by three agencies -- Moody's, S&P, and Fitch.

Perhaps the smaller credit rating agencies can issue a "shadow sovereign credit rating" factoring the regional factors like the political parties that come out with a shadow budget ahead of the actual budget presented by a state government.

Similarly, a common currency for the BRICS nations is a step towards dedollarisation