India's rating upgrade reflects growth story: Niti Aayog
Nov 18 2017
Taking on detractors who have criticised reforms, including demonetisation and GST, Jaitley, said, "I am sure that many who had doubts would now seriously introspect on their own positions". India's sovereign credit rating was last upgraded in January 2004 to Baa3 (from Ba1).
Moody's on Friday upgraded India's credit rating for the first time in more than a decade, citing economic reforms introduced under Prime Minister Narendra Modi.
Finance Minister Arun Jaitley called the upgrade "a belated recognition of all the positive steps which have been taken in India in the last few years". The Sensex rose 235.98 points to close at 33,342.80, even after paring initial gains.
The agency said the reforms initiated by the Indian government could improve the business climate, productivity, stimulating foreign and domestic investment, and hence fostering strong and sustainable growth. "The rating agency too has now confirmed it formally, which is welcome". Moody's also upgraded India's local currency senior unsecured rating to Baa2 from Baa3 and its short-term local currency rating to P-2 from P-3. The second quarter's numbers would be out by the end of this month.
Moody's has upgraded India's ratings after a gap of 13 years in a report released on November 16.
The Congress was quick to dismiss India's improved rating.
Moody's noted that, the fading of disruption assisted by recent government measures to support SMEs and exporters with GST compliance, real GDP growth will rise to 7.5 per cent next fiscal, with similarly robust levels of growth from FY2019 onward. In a statement on Friday morning, the credit ratings agency said: "The decision to upgrade the ratings is underpinned by Moody's expectation that continued progress on economic and institutional reforms will, over time, enhance India's high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term".