Standard & Poor’s, the global rating agency, has upgraded India’s sovereign rating to investment grade ‘BBB-/A-3’ with a ‘stable’ outlook from its present non-investment grade ‘BB+/B’. Although, analysts find S&P behind the curve as the other global rating agencies had upgraded India’s rating much earlier. Moody’s Investors Service had raised India’s foreign currency sovereign rating to investment grade in January 2004 only, and another global rating agency Fitch Ratings had upgraded India’s rating to investment grade in August 2006. Nevertheless, the S&P upgrade is expected to enhance the prospects of India as an investment destination, as it will allow more foreign funds to take exposure in India. More foreign money can be expected to flow in, as the higher rating will help attract foreign institutional investment (FII) into stock markets as well as foreign direct investment (FDI) in new projects. It will also reduce the cost of borrowing for Indian borrowers abroad. Pension funds of the U.S. and other countries that are restricted to invest only in investment grade securities can also look at the possibilities in India, and make the big entry that was still missing here.

The world’s largest securities firm Goldman Sachs’ latest report released in the last week of January 2007 says that India can sustain about 8% growth rate till 2020. The original BRICs (Brazil, Russia, India, China) report published by Goldman Sachs had projected 5.7% growth rate for Indian GDP till 2020. It has also forecasted that India will overtake the U.K. as the world's fifth-largest economy by the middle of next decade, and surpass the G6 economies faster than envisaged in the earlier BRICs report. India has also been forecasted to surpass the U.S. before 2050, to emerge as the second-largest economy after China. Goldman’s new projections for India's potential growth envisage an average growth of 7% from 2006 to 2050. 

Reserve Bank of India (RBI), the central bank of the country, has raised repo rate (the overnight lending rate at which it offers short term credit to commercial banks) by 0.25% to 7.5% in the quarterly review of its monetary policy. RBI wants to check inflation as well as high credit growth with this measure, particularly to the sectors it considers to be of high risk. Such a move is expected to reduce the liquidity (money available in the banking system) and thus tame the inflation. RBI has kept the reverse repo rate (at which the banks park their excess money with RBI) at 6%. Banks are expected to hike the lending rates for consumers and industries, following these policy changes.

If the analysts were waiting for any positive surprises in the corporate results for the third quarter of October-December 2006 (Q3FY07), the big surprise came from none other than the largest private sector company of India. The turnover of the company moved up 40% year-on-year (YoY) to $6,275 million (Rs.27,771 crore) in the quarter. Net profit went up 58% YoY to reach at $632.4 million (Rs.2,799 crore). The turnover and the net profit, both were substantially ahead of the average of analysts’ expectations.

The real surprise, however, came on the refining margin front. Analysts were expecting a decline in the refining margin on account of reduced crude oil prices during the quarter in line with other regional benchmarks, but the company declared the refining margin for Q3FY07 at $11.7 per barrel against the expected margin in the range of $8-$9 per barrel. It compared with company’s refining margin of $9.1 per barrel in Q2FY07 as well as Q3FY06. If we look at the refining margins of regional benchmarks in the Q3FY07, Singapores’ margin was at $3.9, while U.S. Gulf Coast margin stood at $4.2 per barrel. Reliance succeeds in extracting higher margins due to its capability of refining heavy crude optimally, which is much cheaper compared to light sweet crude.

Russia has signed a deal with India to help it construct more nuclear power plants, during the recent visit of the Russian President Vladimir Putin. The Russian President was the guest of honour at India's Republic Day celebrations on Friday, January 26, 2007. Under the agreement, 4 reactors will be built at the Kudankulam nuclear power station in the south Indian state of Tamil Nadu, subject to the 45-member Nuclear Suppliers' Group lifting its restrictions on India this year. Russia is already helping India to build two reactors. Energy security is one of the prime concerns for India, as its economy is growing rapidly. During Putin’s Delhi tour, India's largest public listed company Oil and Natural Gas Corp. Ltd (ONGC) and Russia's state-run Rosneft signed an agreement for a range of joint energy projects from drilling to retailing. The two companies have already joined hands in Russia’s Sakhalin-I oil field and plan to make a joint bid in the auction for the Sakhalin-III field as well. 

Summa Telecom, supported by the Russian government, is planning to invest $500mln-$1bln into India in the next one or two years. The company, in a partnership with an Indian firm, would buy telecommunications assets to provide its mobile services of the GSM, 3G, and WiMax standards. The only company to have a national licence for Wi-Max licence service in Russia, the company aims to provide communication services in all regions of India.

The new master plan for Delhi, the capital city of India, approved by an empowered Group of Ministers is set to release 27,000 hectares for building residential complexes to be developed by private developers. It will also end the monopoly of Delhi Development Authority (DDA) in acquiring land in and around Delhi. In another first, the pricing of the apartments in residential complexes developed by the private builders will be determined by a real estate regulator. The land to be released accounts for roughly 18% of Delhi’s area, and is mainly in the north-west and south-west areas of the city, at places such as Najafgarh, Dwarka and Alipur. The plan also makes it mandatory for private developers to reserve 35% of new dwelling units, or 15% of the floor area ratio, whichever is higher, for low income families.

The Rajasthan government has approved the proposed second Indian car plant of Honda Siel Cars India (HSCI), Indian arm of Japanese car manufacturer Honda Motor Co. Ltd, in the state. The choice of Rajasthan was due to its proximity to the northern and eastern region of India, which accounts for 45% of the total sales of the company. The second plant spread in 500-700 acres will manufacture Honda’s small car in the Indian market with an initial capacity of 50,000 units per annum along with supplier’s park to house Honda’s network of ancillary units.