Moody Investors Service upgraded India’s sovereign credit rating for the first time from Baa3 to Baa2.
According to Nischal Maheshwari, Who is head of institutional equities at Mumbai-based brokerage Edelweiss Securities Ltd, The upgrade will lower borrowing costs for India’s government and companies.
While rating companies may have lost some of their allure globally following the 2008 financial crisis. Their assessments are still seen as a stamp of credibility for emerging markets where national statistics can often be dodgy.
Avinash Thakur, managing director of debt capital markets at Barclays Plc, The upgrade “makes a big difference to investors”. We will see more dollar bond supply from India, like more public sector undertakings would be printing.
The upgrade, Moody’s first of India since January 2
004, moves the rating to the second-lowest investment grade. One notch higher than Standard & Poor’s and Fitch, which have kept India just above “junk” status for a decade and more.
Ease of doing Business :-
Last year’s removal from circulation of almost 90 percent of the nation’s currency weighed on growth. Expansion in gross domestic product slipped below 6 percent in the April-June quarter. The expectations that the government will need to announce a fiscal stimulus package to boost activity. PM Modi has pushed through sweeping reforms, with mixed results.
Other points such as efforts to cut red tape and the imposition of a new consumption tax. It have met with mixed success. The government won praise from ratings firms for a $32 billion program to recapitalize banks that economists say will revive lending and stoke demand on the ground.
The World Bank acknowledge it’s getting easier to do business in India. With Asia’s third-largest economy jumping 30 places to rank 100th in the latest ranking released last month. Pew Research Center said PM Modi remained a popular leader and public confidence in the economy and the overall direction had improved.
Moody’s said it expects India’s real GDP growth to moderate to 6.7 percent in the fiscal year ending in March 2018 from 7.1 percent a year earlier.
While these burnish Modi’s global credibility, There is questions about the health of the $2 trillion economy.