Moody’s upgrades India's rating for the first time since 2004, BJP praises Modi government
For the first time in more than a decade, Moody's Investors Service has upgraded India's sovereign rating. In what is being called a big rise with India moment, Moody's ratings have been upgraded citing continued progress in the nation's economic and institutional reforms.
"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," said a statement from Moody's Investors Service.
This is the first time since 2004 that India's government bond ratings have been upgraded. The rating agency upgraded India's rating to Baa2 from Baa3 with an outlook on the rating as 'stable'.
The BJP has been celebrating the upgrade with party President Amit Shah crediting the upgrade to Narendra Modi government's policies.
Moody's believes that Modi Govt’s reforms will improve the business climate, enhance productivity, attract more investment & put India on a higher growth trajectory.— Amit Shah (@AmitShah) November 17, 2017
Moody's ratings come in the backdrop of Modi government receiving flak from opposition parties over demonetisation, GST and economic slowdown. Moody's in its rating has claimed that the reforms being pushed through by the government will help stabilise debt. While GST and demonetisation have been topics of debate in India, Moody's has acknowledged the short term weakness in the economy but has stated that it expects real GDP growth to moderate to 6.7 per cent in the fiscal year ending in March 2018. The rating agency added that as disruption fades, India's GDP growth will rise to 7.5 per cent.
The last time India's rating was upgraded was during the BJP government led by Atal Bihari Vajpayee. Moody's has also raised India's long-term foreign-currency bond ceiling to Baa1 from Baa2, and the long-term foreign-currency bank deposit ceiling to Baa2 from Baa3.