Moody’s lifts credit mood

Sanjeev Sharma

Tribune News Service

New Delhi, November 17

After 13 years, India’s sovereign credit rating has been upgraded by global agency Moody's to Baa2 from Baa3 with a changed outlook on the rating to “stable” from “positive”.

The upgrade will boost India’s growth story with enhanced foreign inflows, lower cost of borrowings for government and corporates and pep up rupee and stock markets. BSE Sensex today shot up by 235 points to close at 33,342 points following the ratings upgrade.

Edit: Moody’s swing

The Moody’s Investors Service move is being seen as a boost for the economic policies of the Narendra Modi government. The agency said the continued progress on economic and institutional reforms would, over time, enhance India’s high growth potential and its large and stable financing base for government debt.

“While a number of important reforms remain at design phase, Moody’s believes that those implemented to date will advance the government’s objective of improving the business climate, enhancing productivity, stimulating foreign and domestic investment, and ultimately fostering strong and sustainable growth,” Moody’s said.

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Among the key reforms that Moody’s noted were the GST, measures to address the overhang of non-performing loans (NPLs) in the banking system; and measures such as demonetisation, the Aadhaar system and targeted delivery of benefits through the direct benefit transfer (DBT) system.

However, the agency noted that these reforms will take time to yield results. “Most of these measures will take time for their impact to be seen,” it said. Chief Economic Adviser Arvind Subramanian, meanwhile, said the upgrade was long overdue.

About the agency

• Founded in 1909, Moody’s Investors Service, often referred to as Moody’s, provides international financial research on bonds issued by commercial and government entities
• It assigns securities rating from Aaa to C-Aaa being the highest and C the lowest
• Moody’s, along with Standard & Poor’s and Fitch Group, is considered one of the top three credit rating agencies in the world

‘Doubters, introspect’

Many who had doubts about India’s reform process should now seriously introspect on their position. These reforms are directional and all steps follow a particular roadmap — Arun Jaitley, Finance Minister