Ratings agencies are a bit slow when evaluating emerging markets and India has been at the receiving end, Sabnavis said. “It’s a very big step as they have acknowledged that fundamentally, (the) Indian economy is doing very well on all scores.”
Even in terms of fiscal deficit, S&P said that if it comes to around 7%, there could be a change in the rating too. States have shown good performance on the deficit front and there is a strong enough reason to believe that the deficit target can be attained very soon, according to Sabnavis.
This is not only a boost to general sentiment but companies that borrow overseas will also benefit. It is much more likely other rating agencies will also follow suit. The change in ratings could also be happening in a year or two, he said.