India’s Credit Rating Upgraded For The 1st Time in 14 Years! Moody’s Backs PM Modi’s Reforms
Moody’s is a 108 year old financial services company from USA, which provides credit rating for countries based on their economic growth.
Moody’s Corporation, also known as Moody’s, is a 108 year old financial services company from USA, which provides credit rating for countries based on their economic growth. Their ratings are well respected across the business hemisphere, and often forms the base for investment decisions.
Yesterday, for the first time in last 14 years, they have upgraded India’s credit rating, and this is indeed big news.
For this improvement in the ranking, Moody’s have mentioned the ongoing economic reforms initiated by the present Govt.; and this means that PM Modi’s decisions regarding demonetization and GST has received an international approval.
Moody’s: India On Track Of Positive Growth
Upgradation of India’s credit rating by Moody’s is a big news, because it has been done after 14 years, and done at a time when business analysts and observers are severely questioning PM Modi’s decisions to implement GST and ban 80% of currencies overnight.
By improving India’s credit rating, Moody’s has acknowledged the fact that the decisions were right, considering the future of India’s economic growth.
Moody’s said in a statement:
“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.”
Expressing delight on this news, India’s Finance Minister Arun Jaitley has clearly stated that those who doubted GST and demonetization should get some perspective now. He said,
“Many who had doubts about India’s reform process would now seriously introspect on their position,”
Meanwhile SBI Chairman Rajnish Kumar also expressed confidence as he said,
“It is reaffirmation of how the world views India,”
BSE index jumped by 235.98 points after this news came out; while Nifty closed 68.85 points up.
Finance secretary Hasmukh Adhia tweeted,
2/3 The path that Government has chosen for long term reforms and fiscal consolidation is well recognised by investors already.
— Dr Hasmukh Adhia (@adhia03) November 17, 2017
India’s Credit Rating Updated: Now What?
Moody’s improved rating for India means that investors can now have more confidence and more clarity regarding India’s future, and they will be more open to investing there.
As per analysts, foreign portfolio investments in India can increase in the coming days, external commercial borrowings will become cheaper, and more convenient.
However, the rating agency has warned that if fiscal metrics and the outlook for general government fiscal consolidation deteriorates materially, then the ratings can be improved.
This means that India needs to keep the momentum of growth, and allow banking system to incite more expansion.
“The rating could also face downward pressure if the health of the banking system deteriorated significantly or external vulnerability increased sharply,”
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