Moody’s Investor Service changes India credit rating to positive

Policy actions will enhance India’s economic and financial strength, says the rating agency

GN Bureau | April 9, 2015


#Moody’s   #credit rating   #positive   #economy   #Narendra Modi   #Raghuram Rajan  

In the backdrop of record foreign exchange reserve in India’s kitty, there is one more good news that may strengthen the hands of prime minister Narendra Modi when he visits Europe this month.  India’s credit rating outlook has been raised to positive by Moody’s Investors Service on Thursday. The country’s Baa3 rating was affirmed and the outlook was revised from stable.

It said there was an increasing probability that actions by policy makers will enhance the country's economic strength and, in turn, the sovereign's financial strength over coming years. Moody's said it expected structural advantages, supported by relatively benign global commodity prices and liquidity conditions, will keep India's growth higher than that of its peers over the rating horizon.

The ratings agency had improved the country's sovereign credit rating outlook from negative to stable in September last year indicating the possibility of a rating upgrade.  And Thursday’s positive outlook signals global optimism in the efforts of Modi and Reserve Bank of India governor Raghuram Rajan to improve Asia’s No. 3 economy.

Policy makers are putting in place the right measures to address inflation and increase investment, Moody’s said.

“Recent measures to address inflation, keep external balances in check, simplify the regulatory regime for investors, increase foreign direct investment, and facilitate infrastructure development will reduce some of India’s sovereign credit constraints,” Moody’s said. “The ability of policy makers to strengthen India’s sovereign credit profile to a level consistent with a higher rating will become apparent over the next 12-18 months.”

“The Baa3 rating incorporates the risk that higher levels of growth and infrastructure development will be accompanied by higher leverage,” it said. “Sovereign credit improvements over the next 12-18 months will depend on the extent to which growth, policies and buffers can contain the risks associated with rising leverage.”

Meanwhile, forex reserves increased by more than $1 billion in the week ended March 27 to $341.4 billion, according to data released by RBI. The reserves are closing the financial year at a record high, having breached the previous record of $320 billion in February this year.

In 2014-15, foreign institutional investors (FIIs) invested $44.83 billion in equity and debt. Of this, $17.89 billion was invested in equity and $26.93 billion in debt. FII investment rose more than four-and-a-half times compared with $9.76 billion in 2013-14.

 

Comments

 

Other News

Five Ws of Gandhi assassination

The Murderer, the Monarch and the Fakir: A New Investigation of Mahatma Gandhi’s Assassination By Appu Esthose Suresh and Priyanka Kotamraju HarperCollins, 240 pages, Rs 399 The bloodied shawl has long since faded to a vague brown and now sports

13 states told increase Covid-19 testing

In view of several countries reporting surges in Covid-19 cases and many developed nations facing fourth and fifth waves despite high numbers of vaccinations, the Ministry of Health and Family Welfare has written to the states of Nagaland, Maharashtra, Sikkim, Kerala, Goa, Manipur, Meghalaya, Mizoram, J&am

PMC Bank proposed resolution: Areas of darkness at the end of tunnel

A few months after the Punjab and Maharashtra Co-Operative Bank Ltd (PMC Bank) was put under moratorium in September 2019, I met an announcer in a function on banking organised by an industry body, with which I have been associated. She was young, pretty beautiful and had a sweet voice and modulation. She

Atal Innovation Mission and Vigyan Prasar collaborate to engage with science and Atal Tinkering Labs

 Niti Aayog’s flagship initiative, Atal Innovation Mission (AIM), recently announced to collaborate with Vigyan Prasar, an autonomous organization of the Department of Science and Technology, Government o

PM to lay the foundation stone of Noida International Airport on November 25

 In a major development, Uttar Pradesh is poised to become the only state in India to have five international airports, as Prime Minister Narendra Modi is to lay the foundation stone of the Noida Internation

President Kovind honored India’s Cleanest cities at Swachh Amrit Mahotsav

n a recent prestigious event the President of India Ram Nath Kovind felicitated the awardees of the cleanest cities of India at the ‘Swachh Amrit Mahotsav’as part of Swachh

Visionary Talks: Dr. Naresh Trehan, CMD Medanta Heart Institute with Kailashnath Adhikari



Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter