Two out of the three major rating agencies have now adopted a stable outlook on India’s sovereign ratings. Moody’s Investors Service changed its outlook from negative to stable on October 5. The rating is still at the lowest invest-ment grade, only a notch above “junk”.

       The highest was in 1988 at A2, or four grades above than it is today. There were sharp declines around the foreign exchange crisis that led to libe-ralisation in the early 1990s (chart 1). India had only enough reserves to cover three weeks of imports in December 1990. Import cover has now ...