Is Upgrade by S&P Relevant for India?

This week positive news came from global rating agency S&P. S&P has upgraded India's rating from negative to stable position. This means India is slightly in better position than earlier. This was done perhaps on account of higher GDP growth during last quarter and higher expected GDP growth rate that India is expected to post this fiscal year. S&P has also cited that it has higher faith in current regime in India as government would take decisions on time.

Now it is accepted that S&P finds India as better investment destination than earlier. But I want to know “Would it be helpful to Indian economy in anyways?” My answer is if not ‘no’ then it is ‘not much’. The only benefit that I can see is that to some extent debt for India would cost slightly lower than the earlier. Besides this there would not be any changes. I think practically it would not have any relevant impact on Indian economy as investment in any economy is not dependent on ratings alone like earlier times. At the same time the credibility of ratings has deteriorated over time and investors prefer to assess and explore opportunities on their own.

At the same time it is well fact to all that India has huge opportunities for investors and at present it is being said that there is a strong and active government in the center which take decisions instead of sitting on them like earlier government. But at the same time we have to wait and watch for the next monetary policy announcement by RBI. Also these days debt to the government is dependent on relationships than ratings. These together have basically forced S&P to upgrade India’s rating rather than so called basics. Rather there is a lot of questioning about the rating’s credibility and usability in today’s world.