Moody boost for Modi: India's sovereign bond rating raised
Investors service says continued progress on economic and institutional reforms will boost the country's growth potential
Moody's Investors Service upgraded its ratings on India's sovereign bonds for the first time in nearly 14 years on Friday, saying continued progress on economic and institutional reforms will boost the country's growth potential.
The decision by Moody's is a shot in the arm for Prime Minister Narendra Modi's government and the reforms it has pushed through
The agency said it was lifting India's rating to Baa2 from Baa3 and changed its rating outlook to stable from positive, as risks to India's credit profile were broadly balanced.
Moody's upgrade, its first since January 2004, moves India's rating to the second lowest level of investment grade. Standard & Poor's has kept India at the lowest investment grade, just above junk status, for a decade and Fitch Ratings for one year longer.
The decision by Moody's is a shot in the arm for Prime Minister Narendra Modi's government and the reforms it has pushed through, and comes just weeks after the World Bank moved India up 30 places in its annual ease of doing business rankings.
All Indian markets, including stocks, bonds and rupee, rallied on the ratings upgrade.
Last year, India lobbied hard with Moody's for an upgrade but failed. The agency raised doubts about the country's debt levels and fragile banks, and declined to budge despite the government's criticism of its rating methodology.
Finance Minister Arun Jaitley told reporters Moody's decision was a "belated recognition" of the steps the government has taken to fix India's $2 trillion economy.
Moody's said it expects India's real GDP growth to moderate to 6.7 per cent in the fiscal year ending in March 2018 from 7.1 per cent a year earlier. 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 added.
What India's GDP growth will rise to in 2018-19, as per Moody's expectations
Sign up for all the latest news, top galleries and trending videos from Mid-day.comSubscribe