The markets again touched their all time highs last week. In course of the week another issue came back to the forefront of the country’s economic debate. It was the review of India’s Sovereign ratings. And, it is quite clear that the ratings upgrade is nowhere near. India’s sovereign rating has been unchanged for the past decade. From June 2007, our rating has been BBB- ; the same for ten years with minor changes in the outlook. The outlook changed from stable to negative only to return to stable. Surely, the fact that India has weathered many a crisis in the interim and recently grown the fastest among peer Nations of the world has to count for something. But, the rating agencies have stood firm. Our states are possibly a bigger problem with mounting debts and poor management of public finances. But, it is still surprising given the way Indian government managed to pull our economy back from the 2009 bottom, bring forward continuous reforms, implement technology driven welfare schemes and reform taxes with GST. Few Nations have moved ahead so convincingly even in the face of adverse economic conditions. The stable political climate is also likely to catalyze further economic reforms and growth. Yet, the global rating agencies have adopted a wait and watch approach. Till the upgrade happens, domestic investors get more time to invest in the India story. The delay may actually be good for us.
“In investing, what is comfortable is rarely profitable”