Moody's upgrade a recognition of Modi govt's reforms: FM Arun Jaitley

Laura Christensen
November 19, 2017

Taking on opposition, Jaitley said those who had doubts about the government's reforms must introspect. In 2015, the rating outlook was changed from "stable" to "positive". "We welcome it and believe that it is a belated recognition of all the positive steps taken in India in the last few years which have contributed to the strengthening of the Indian economy", he told reporters here.

Moody's Investors Service on Friday upped the long-term ratings of four Indian financial institutions including SBI and HDFC Bank by a notch to Baa2 following the upgrade of the country's sovereign rating to the same level.

Jaitley said that it is encouraging that there is an global recognition and this recognition firms our determination to follow the track that we have embarked upon. It also noted that the reforms implemented reduced the risk of a sharp increase in debt, even in potential downside scenarios.

But Moody's lowered India's growth projection for the current fiscal because of the impact of demonetisation and the Goods and Services Tax (GST).

"Longer term, India's growth potential is significantly higher than most other Baa-rated sovereigns", said Moody's.

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The upgrade has not happened in isolation and for the last three years the India has been the fastest growing major economy, he added.

"Now that there is an worldwide recognition is extremely encouraging and this recognition will further our determination", he added.

Last year, India lobbied hard with Moody's for an upgrade, but failed.

Prior to this rating action, HDFC Bank's BCA and ratings were constrained by India's previous sovereign rating of Baa3 given the bank's significant exposure to the government in common with other Indian banks.

Within minutes of upgrade the Government's Chief Economic Advisor Arvind Subramanian tweeted, "Moody's India rating upgrade. 1". The Finance Minister, Shri Jaitley re-iterated his Government's commitment for both increasing the public expenditure on infrastructure and creating environment for private participation in infrastructure to boost employment and provide impetus to overall economic growth.

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