S&P Raises India's Debt Rating, But It's Nothing To Be Proud Of

India's debt rating was raised to investment grade by Standard & Poor's for the first time in 14 years as Asia's fourth largest economy grows at a record pace.

S&P increased the rating by one level, to BBB- from BB+. Moody's Investors Service raised its rating to investment grade in January 2004, followed by Fitch Ratings in August 2006. S&P was the last to do so.

So what do we make of this? Was S&P the most conservative and stringent, or was the most shortsighted? Missing the trend until it was obvious to everyone but S&P?

Sovereign ratings can be out-of-sync sometimes. I never quite understood the alacrity with which Russia could be raised to investment grade by all rating agencies 2-3 years ago. This was just 4-5 years after Russia defaulted on some $50bn of debt! From default grade, you can raise a country to investment grade faster than a country which has never been even close to defaulting for a long time.

Also, this rating is nothing to be proud of. India's rating is still the lowest amongst major Asian economies. As per the S&P website, at least 13 other countries are investment grade, including hold your breath - Pakistan.

Pakistan's rating is an almighty B+. Reward for supporting USA's fight against terror?

Ahead of us are such names like Vietnam, Indonesia, Thailand, Philippines, Sri Lanka, even Mongolia. Malaysia is in the A- category. Thailand, Malaysia, Indonesia were countries that got shafted in the Asian contagion of the late '90s, where Russia had also defaulted.