Published: Mon, November 20, 2017
Research | By Jennifer Evans

Moody's Raises India's Sovereign Ratings

Moody's Raises India's Sovereign Ratings

Former Union finance minister P Chidambaram on Sunday claimed that U.S. credit rating agency Moody's upgraded India's ranking based mainly on the work done by the previous UPA government. "We are anxious about the dark clouds today", he said.

In a statement on Moody's rating, Sumeer Chandra, Managing Director of HP Inc India said the upgrade is a big boost for India, as it will improve sentiments around ease of doing business within local and global investors. The markets cheered the move.

The 30-scrip Sensitive Index (Sensex) traded 329.40 points or 0.99 per cent higher during the mid-afternoon session. The Nifty crossed the 10,300-mark but ended at 10,283.60, up 68.85 points. Some of the gains were clipped later in the day.

Senior Bharatiya Janata Party leader Yashwant Sinha on Friday took a dig at the Narendra Modi government said that there should be a midnight ceremony in Parliament to celebrate Moody's upgrade of India's rating.

India joins Bulgaria, Colombia, Italy, Oman, Panama, Philippines, Spain, and Uruguay in the Baa2 basket.

Other global rating agencies were, however, more cautious in their outlook.

Congress leader Kapil Sibal on Saturday said the upgradation of India's rating by USA credit rating agency Moody's was not in sync with the "mood of the people".

India's economic growth had slipped to an over three-year low of 5.7 per cent in the first quarter.

Acknowledging that some steps such as the GST and demonetisation have "undermined" growth in the near term as reflected by the slower GDP growth of 5.7% in the first quarter of 2017-18, Moody's said it expects real GDP growth in India to moderate to 6.7% in this fiscal year.

With the government committed to fiscal consolidation, India might not have to wait for 13 long years for next sovereign upgrade by a rating agency, said a SBI report.

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. "Maybe, the bank recap move convinced them that India is on the reform path and we mean business". Incidentally, Moody's had upped the outlook for India in 2015 and the upgrade was actually more a question of when rather than whether?

Moody's Corporation, also known as Moody's, is a 108 year old financial services company from United States of America, which provides credit rating for countries based on their economic growth.

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