Union Finance Minister Arun Jaitley on Friday lauded India’s sovereign rating upgrade to Baa2 from Baa3 by credit rating agency Moody’s earlier today and said it’s a belated recognition of all the positive steps taken by India in the last few years. Addressing a press conference in New Delhi on the occasion, Jaitley celebrated the announcement saying India got its upgrade after a long spell of 13 years. “We welcome this upgrade, we believe that it is a belated recognition of all the positive steps which have been taken in India in the last few years.” The rating upgrade to Baa2 comes after a gap of 13 years -Moody’s had last upgraded India’s rating to ‘Baa3′ in 2004.
Sovereign rating is issued to national governments and a barometer of the country’s investment climate. It gives investors insight into the level of risks, including political, associated with investing in a particular country.
The credit rating agencies’ decision underpinned the 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. It will also contribute to a gradual decline in general government debt burden over the medium term, it said. Also Read: Moody’s upgrades India’s sovereign rating to Baa2 with a stable outlook, says reforms will foster growth
“This is not something that’s happening in isolation,” emphasised Jaitley, adding that India is the fastest growing among the major economies for three years in a row if one looks at the big picture. “India is one of the few undertaking structural reforms. Even in World Bank’s Ease of Doing Business ranking, we have moved up 42 positions in three years, which is no mean achievement,” he said.
#Moody‘s upgrade recognises the fiscal prudence that India has committed itself to.
— Arun Jaitley (@arunjaitley) November 17, 2017
Jaitley said the Moody’s rating was encouraging given that this recognition firms up India’s determination to follow the path the country has embarked upon. “Steps taken in last few years follow a particular roadmap. It is extremely encouraging that there is an international recognition,” said the finance minister. “If you look at our track record of three years, it has been one of the better records in Indian history as far as fiscal discipline is concerned, and we intend to move on that track,” Jaitley added.
When asked by the media about India’s future roadmap, Jaitley said there will be more emphasis on implementation and reaping the growth benefits in terms of expenditure and infrastructure building. He also told the media to not link the Moody’s rating upgrade with elections.
The finance minister also sought to credit his government’s initiatives such as demonetisation and Goods and Services Tax (GST) which received universal acknowledgement. “The fact that a series of steps including demonetisation, which are now taking Indian economy to a greater formalization and digitisation, something which is being universally acknowledged.”
He also took a dig at the opposition saying, “Many who had doubts in their minds about India’s reform process would now seriously introspect on their positions itself.” His comments came in relation to the Congress leadership’s scathing attack on the Centre after the World Bank had released its Ease of Doing Business index on October 31 in which India jumped up 30 notches into the top 100 rankings. The Congress had alleged that the BJP has created “ease of doing corruption in Gujarat” during its 22-year rule in the state.
Earlier in the day, credit rating agency Moody’s said in a statement that it believes that recent reforms offer greater confidence that the high level of public indebtedness which is India’s principal credit weakness will remain stable, even in the event of shocks, and will ultimately decline. Back in 2015, the rating was changed to ‘positive’ from ‘stable’. The ‘Baa3’ rating was the lowest investment grade — just a notch above ‘junk’ status.
Indian Rupee jumps 61 paisa against US Dollar
After the rating upgrade, Indian Rupee jumped 61 paisa or 0.93 per cent against USD to trade at 64.72. Sensex and Nifty too jumped 1.2 per cent by 400 points and 110 points respectively after the upgrade in sovereign rating.
Chief Economic Adviser Arvind Subramanian says its a ‘welcome development’
Close on the heels of the sovereign rating upgrade, Chief Economic Adviser Arvind Subramanian told ANI the rating upgrade was a welcome development. “It’s a welcome development but we also feel it was long overdue. It’s a recognition of the actions the govt has undertaken on GST, bankruptcy and all of that,” he said. Also Read: Arvind Subramanian welcomes upgrade, calls it ‘long overdue’
Shaktikanta Das lauds Moody’s rating upgrade
Similarly, former Economic Affairs Secretary Shaktikanta Das also said that Moody’s upgradation will have a positive impact and will boost investments here. In a statement to ANI, Das said: “It should’ve been done a year ago. A large number of reforms were taken in last 3 years, all of which were on track. It’s good they concluded that all reforms in India are long-term and deep-rooted.”
Sebi chairman says it’s a ‘positive inflection point’
Sebi chairman Ajay Tyagi termed Moody’s much-awaited sovereign ratings upgrade as “positive inflection point”. He said it is an acknowledgement that the reform measures being taken by the government are in the right direction, adding that the rating upgrade to Baa2 would further boost investments including foreign inflows.
“It is a positive inflection point. In fact, government in the last three-and-a-half years has introduced so many reforms,” Tyagi told PTI.
Niti Aayog chairman expresses hope that other credit rating agencies will follow suit
Niti Aayog Vice Chairman Rajiv Kumar expressed hope on Friday that other global agencies such as S&P and Fitch would follow suit. In a tweet, Kumar said: “Moody’s upgrading India’s Ratings is a reflection of India growth story and sound economic principles for a #NewIndia. Hoping others will follow.”
Ratings of four Indian banks upgraded
Moody’s Investors Service today upped the long-term ratings of four banks including SBI and HDFC Bank by a notch to Baa2 following the upgrade of the country’s sovereign rating to the same level. The four institutions with revised rating are Export- Import Bank of India (EXIM India), HDFC Bank, Indian Railway Finance Corporation Limited (IRFC) and State Bank of India (SBI), Moody’s said in a statement.
Moody’s Rating Upgrade puts India alongside Italy, Spain among others
The rating upgrade has put India alongside Italy, Spain, Bulgaria and the Philippines in terms of investment climate. In effect, India has become the largest economy among Baa2-rated sovereigns, according to Moody’s. Sovereign rating is issued to national governments and a barometer of the country’s investment climate. It gives investors insight into the level of risks, including political, associated with investing in a particular country.
Yashwant Sinha on Moody’s rating upgrade
On Twitter, Yashwant Sinha said: “We should celebrate Moody’s upgrade by holding a midnight ceremony in Central Hall of Parliament and damn Standard and Poor.”
Union Minister Ravi Shankar Prasad says rating upgrade recognition of changing India
In a statement to PTI, Union Minister Ravi Shankar Prasad said: “This revision of sovereign rating of India is recognition of changing face of India, of good governance, investment, decision-making fairness, pro-investment and pro-growth policies… most importantly, a governance of integrity
(With inputs from PTI)