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Will global ratings agency Standard & Poor's today raise what some have called its "poor standards" when it comes to rating India?
That's the question uppermost on the minds of a lot of people, especially as today's S&P rating will come a week after another ratings agency Moody's Investor Service upgraded India's sovereign rating after as long as 14 years.
The "poor standards" jibe was made by chief economic advisor Arvind Subramanian in May this year. He slammed ratings agencies for not upgrading India "despite clear improvements in economic fundamentals". And he made a play on words with the name 'Standard & Poor's'.
The chief economic advisor's comment at the time came after US-based agency Fitch kept India's sovereign rating at 'BBB-', a rating it assigned more than a decade ago.
S&P last changed India's rating in January 2007, to BBB-, which is the lowest investment grade rating for bonds. The outlook assigned then was 'stable'. It changed the outlook to 'negative' in 2009 and raised it to 'stable' in 2010.
In 2012, S&P again lowered the outlook to 'negative', which it raised to 'stable' soon after the Modi government assumed office in 2014. The rating, however, remained unchanged at BBB-.
Last week, Moody's revised the country's sovereign ratings to Baa2 from Baa3, citing the implementation of several reforms like the GST rollout, the insolvency act and demonetisation. The Moody's ratings of Baa2 is an investment grade rating and marginally better than S&P's current assessment. Another upgrade in the ratings is expected to boost market sentiment, reiterate India's attractiveness as an investment destination and assure investors about the direction of policies.
"In recent years, rating agencies have maintained India's BBB- rating, notwithstanding clear improvements in our economic fundamentals (such as inflation, growth, and current account performance). At the same time, China's rating has actually been upgraded to AA-, even though its fundamentals have deteriorated," said Subramanian in May.
(TOI)
