Rating downgrade threat: What does it mean?

Passage of the food bill has led to speculation on the prospects of a rating downgrade for India

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The passage of the Food Security Bill by the Lok Sabha on Monday has led to some experts raising the prospects of a rating downgrade for India. They claim the government would not be able to contain the fiscal deficit at 4.8% of gross domestic product (GDP) in 2013-14, as the food entitlement would add Rs 1,30,000 crore to the exchequer's burden. While a rating downgrade is still in the realm of speculation, here is a look at what such an action would mean in practical terms for the country: