Moody’s upgrades India on better growth prospects, reforms

 NEW DELHI, Nov 17 – In a boost to the Modi government, Moody’s Investors Service today raised India’s sovereign rating for the first time in over 13 years, saying that growth prospects have improved with continued economic and institutional reforms.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.

Finance Minister Arun Jaitley termed the move as “belated recognition” of reforms undertaken by the government and said the reform agenda will continue with emphasis on higher spending on infrastructure and in rural areas.

Government officials expressed hope that other credit rating agencies, such as S&P and Fitch, would follow suit.

While upgrading the rating, Moody’s cited reforms like the recently-introduced Goods and Services Tax (GST), improvements to the monetary policy framework, measures to clean up non-performing loans and efforts to bring more areas into the formal economy.

The one-level step-up from the lowest investment-grade ranking puts India in the league of the Philippines and Italy.

India’s sovereign credit rating was last upgraded in January 2004 to Baa3 (from Ba1). ‘Baa3’ was the lowest rating in the investment grade – just a notch above the ‘junk’ status. Baa2 rating means investment grade with moderate credit risk, and is two notches above the junk grade. – PTI

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