A big beautiful rating upgrade

COMING ON THE eve of India's 79th Independence Day, the sovereign rating upgrade by S&P, vindicating economic resilience and sustained fiscal consolidation, is a celebration of the very idea of India.

- SOUMYA KANTI GHOSH

For the record, the last time India was accorded a BBB sovereign rating was in 1990, the balance-of-payments crisis washing away the house of cards by March 1991.

Basis S&P, credit ratings are a forward-looking opinion about the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial programme (sovereign ratings are counted under the issuer categories).

In terms of rating, India has been often undershooting its true state of affairs in the eyes of major raters despite robust performance on all metrics, in particular on governance, stability, and technological prowess of late. This situation has often looked comical when the story is calibrated against comparable economies placed in a better rating cohort, many faring poorly on primary parameters—namely debt to GDP, fiscal prudence, growth dynamics, and capital markets vibrancy, not to speak of latent yet important traits such as innovation quotient, start-up economy, uplifting hundreds of millions from poverty, digital revolution that has made technology a public good, robust adoption of mass frictionless payment, and an instantaneous settlement architecture and stopping leakage through a full-proof direct benefit transfer system.