The Hindu : Business : Benefits for India, Pakistan: S&P

Online edition of India's National Newspaper
Tuesday, Apr 19, 2005

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Benefits for India, Pakistan: S&P

Special Correspondent

India enjoys a higher rating

NEW DELHI: The recent "dramatic improvement" in relations between India and Pakistan holds promise for significant benefits for the two countries, provided the thaw lasts and finally translates into lasting peace, the global rating agency, Standard & Poor's has said.

In its latest report, coming immediately after the visit of the Pakistan President, Pervez Musharraf, to India and the signing of the joint declaration, the rating agency has noted that the benefits accruing from the improved relations will be more tangible for Pakistan in economic terms as compared to India, mainly on account of the difference in the size of the two South Asian economies.

"The likely rewards for Pakistan can be largely defined in concrete economic terms, the combined effect of which would boost the country's positive credit rating trajectory. For India, however, the benefits are of a less tangible nature, and would accrue more to New Delhi's international standing," the rating agency said. As for India, on the contrary, "the benefits are clearly more on the political side, rather than economic," S&P has observed. At present, India enjoys a higher rating by S&P as compared to Pakistan.

India's greatest mileage from a lasting rapprochement with Pakistan, according to S&P, would accrue from its improved standing on the world stage and its relations with the U.S. This, in turn, could lead to better trade and defence ties with the U.S. and thereby advance India's claim to a permanent seat in the UN Security Council.

Listing the major gains for Pakistan, the rating agency said better ties would reduce its defence expenditure, which could be invested into the social sector.

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