FICCI sees improvement in investors’ confidence

India has welcomed Moody’s Investors Service upgrade of the Government’s local and foreign currency issuer ratings to Baa2 from Baa3, saying it was recognition of its major economic and institutional reforms.

Moody’s has also changed of the outlook on the rating to stable from positive.

India’s rating has been upgraded after a period of 13 years, the last of which was sovereign credit rating upgrade in January 2004 to Baa3 (from Ba1).

The reforms include introduction of path breaking Goods and Services Tax (GST); putting in place a sound monetary policy framework; measures taken to address recapitalisation of public sector banks and a number of measures taken to bring formalisation and digitalisation (The JAM agenda) in the economy – demonetization, the Aadhaar system of biometric accounts and targeted delivery of benefits through the Direct Benefit Transfer (DBT) system.

Moody’s have also rightly recognized the Government’s commitment to macro stability which has led to low inflation, declining deficit and prudent external balance and Government’s fiscal consolidation programme which has resulted in a reduction of fiscal deficits from 4.5% of GDP in 2013-14 to 3.5% in 2016-17 and its consequential sobering impact on general government debt.

The government said it intends to stay the course on fiscal consolidation in the medium term.

“The ratings upgrade along with the recently reported improvement in India’s ease of doing business ranking underline the fact that we are moving in the right direction,” added Pankaj R Patel, President of the Federation of Indian Chambers of Commerce and Industry (FICCI).

“India’s growth story is more promising than ever and we see a further improvement in confidence level of global investment community. This move will not only give a further push to foreign investment inflows into the country but will also enhance our prospects of borrowing money abroad at better rates”, said Patel.

Radhika Rao, Economist at DBS Group Research, noted that institutional and economic reforms, particularly unveiling of the GST and bank recapitalization plan were seen as key strengths. fii-news.com