Moody's raises India rating, cites Modi's economic reforms

Gladys Abbott
November 18, 2017

Stressing that Moody upgrade ratings after a gap of 13 years, Shah claimed that the economy under Manmohan Singh-Sonia Gandhi rule had derailed.

"Moody's raised its rating on India to Baa2 from Baa3, the first such move since January 2004, saying recent reforms would enhance productivity, stimulate foreign and domestic investment and foster "strong and sustainable growth". The country's sovereign rating has now moved a notch above Baa3, the lowest investment grade and just a level above junk rating, to Baa2.

Moody's Investors Service today upgraded India's local and foreign currency issuer ratings to Baa2 from Baa3 and changed the outlook on the rating to stable from positive.

"Moody's upgrading India's Ratings is a reflection of India growth story and sound economic principles for a #NewIndia". Here are four main points based on which Moody's upgraded India's credit ratings.

Credit ratings indicate the general creditworthiness of an entity (such as a bank, corporate or sovereign) and the likelihood that it will meet its financial obligations in a timely manner. "It is a major global recognition of major economic and institutional reforms undertaken by the Government of India", he said while addressing a press conference here. "It is a belated recognition of the positive steps taken in the past few years".

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Chief Economic Advisor Arvind Subramanian, whose Economic Survey had a piece on the "poor standards" of the rating agencies, echoed these sentiments, noting that the upgrade was long overdue.

Jaitley reiterated the government's commitment to structural reforms and said fiscal prudence will be maintained.

Further, Jaitley opined that Moody "rightly recognised" the structural reforms undertaken such as the Goods and Services Tax (GST), monetary policy framework, addressing PSB recapitalisation issue and measures taken to encourage formalisation and digitalisation in the economy.

It cautioned however that high-debt burden remains a constraint on the country's credit profile.

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