Pakistan’s rated better...

IIPM PUBLICATION

Despite upgrading us, S&P thinks so!
It was after fifteen long years that India’s sovereignty got dusted when ratings agency Standard and Poor’s revised India’s credit ratings to ‘investment’ grade.

The lynch-pin of India’s ratings upgradation has been the robustness of the economy. According to Ping Chew, Credit Analyst, Standard and Poor’s, “India’s economic prospects remain strong and are rising gradually, with the GDP trend growth likely to average more than 7.5% in the medium term.” Definitely, this upgradation is good news for the Indian economy, as well as the Indian corporate sector, as this will not only see more capital flowing into the country from outside, but also will bring down the cost of capital for India Inc. Now, with a better sovereign rating, India Inc. can borrow at more competitive and cheaper rates than it used to do previously. But while all of India has been swept by a vehement wind of optimism, many have hardly thought beyond the benefits and realised the fact that India has still a lot to achieve.

If we take a look at India’s position as compared to its Asian counterparts, it gives us a reason to ponder. Amongst the Asian economies, the current rating upgradation still keeps India quite below. There are countries like China, Thailand, Malaysia, Hong Kong, Pakistan and Philippines, which are well ahead of India. As India’s fiscal state still continues to be one of the worst, India should consider this upgradation as a wake up call and improve its fiscal state, rather than celebrate!

Edit bureau: Bikram Keshari Jena

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Source : IIPM Editorial, 2007

An IIPM and Malay Chaudhuri – Arindam Chaudhuri Initiative