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

Mumbai civic body invites urban designers to improve five streets

To redesign and make its streets safer and inclusive in a studio project, the Municipal Corporation of Greater Mumbai (MCGM) has invited urban designers to join hands with its engineers so as to create innovative place-making strategies for improving walkabilty and vehicular efficiency. 

Corporate taxes cut to spur economy

Aiming to dispel the clouds of a slowdown, the government on Friday announced a series of measures including corporate tax breaks to revive economic activities. The stock market, depressed for a while, welcomed the move that would cost the exchequer Rs 1,45,000 crore. Union minister for fina

E-cigarette ban welcome; now aim for more tobacco control

In what it describes as a “major health and wellness initiative for the country”, the union cabinet has approved the promulgation of an ordinance to ban electronic cigarettes. The move, coming amid a debate over the ways to control tobacco use, should be welcomed, and it needs to be complemente

Ajay Singh is president’s press secretary

Ajay Kumar Singh, who has been the editorial director of Governance Now, has been appointed the press secretary of the president of India. The decision was made by the Appointments Committee of the Cabinet headed by prime minister Narendra Modi on Monday. The appointment will be on contract

Amit Shah on India’s languages: What else he said

Home minister Amit Shah’s remark on the need for a single national language has rightly sparked a debate, but the headlines missed much in his speech about language, culture, and identity. Giving away Rajbhasha Gaurav Puraskar and Rajbhasha Kirti Puraskar awards on the occasion of Hin

On A Personal note with musician Apache Indian

Renowned British singer, songwriter and reggae DJ, Apache Indian (originally known as Steven Kapoor) shot to fame with his style of music which came to be known as bhangramuffin (also called bhangragga) – a mix of bhangra, reggaemuffin and traditional dance hall in the early 1990s. His style changed



Current Issue

Current Issue

Video

CM Nitish’s convoy attacked in Buxar

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter