The system of teaching and assessment in the higher education in India is passing through a phase of transition. Many of the universities in India have adopted the semester system with credit- and grade-based evaluation of students. These systems are functionally different from the annual system of teaching and evaluation based on marks and percentage. The grade-based system of evaluation is recommended for its virtues and is accepted as a progressive step toward reforms in the higher education system. However, a critical evaluation of the new system vis-à-vis the older one is necessary. The objective of this article is to focus on some of the issues associated with the calculation of grade point average (in absolute grading), to focus on the anomalies created thereby in conversion of grade point average to percentage, and to suggest alternatives to minimize the arbitrariness so that the examinee is not penalized. The present work illustrates the problems inherent in the grading system using examples from Indian universities. Subsequently, the probable reasons for the problems are discussed. Finally, simple alternative measures are suggested to overcome the shortcomings of the grading system.