Moody's upgrades India's ratings: 10 things you need to know

Nov 18, 2017, 00:24
Moody's upgrades India's ratings: 10 things you need to know

Furthermore, Jaitley said the steps taken by the government in the last few years have contributed to the strengthening of the Indian economy, which ultimately lead to the upgradation. The US-based agency upped India's rating to Baa2 from Baa3, changing outlook to "stable" from "positive", and said that reforms will help stabilise rising levels of debt.

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".

The announcement may kick-off a short-lived rally next week in the bond market, with the 10-year government bond yield likely to fall by 5 basis points, traders said.

Moody's, however, warned the rating could be downgraded "if the health of the banking system deteriorated significantly or external vulnerability increased sharply". "A clear recognition of economic & institutional reforms; well paced shift towards formalisation of the economy; improvement in business climate;positive growth outlook". Standard and Poor's, which still assigns the lowest investment grade to India with a stable outlook, said India needed to address its weak fiscal position, indicating upgrades would take time. "The rating agency too has now confirmed it formally, which is welcome". The second quarter's numbers would be out by the end of this month. While GST and demonetisation have undermined growth over the near term, real GDP growth will rise to 7.5 per cent in 2018- 19 as disruption fades, it said.

The Indian Rupee soared as much as 1 percent on Friday after the Moody's Investor Services upgraded the nation's sovereign rating on optimism that foreign fund flows - both direct investment and portfolio, would accelerate.

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

The Narendra Modi government has just received a pat on the back from a heavyweight-credit rating agency Moody'.