Moody's upgrades India's ratings: 10 things you need to know

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Moody's upgrades India's ratings: 10 things you need to know

Things we need to update ourselves with as Moody's has updated India's ratings.

US-based sovereign credit rating agency Moody's has upgraded India's credit rating by a notch to Baa2 from Baa3 with a stable outlook citing improved growth prospects.

These will be driven by economic and institutional reforms, it said.

Prime Minister Narendra Modi tweeted after the rating upgrade saying that Moody's believe that government's reform will improve the business climate.

Revenue secretary Hasmukh Adhia welcomed the development and said that the credit rating upgrade has recognized Modi government's efforts toward reforming the economy.

Here are 10 things you need to know about the ratings

  1. Sovereign credit rating indicates the level of risk faced by investors while investing in a country. Moody's is a credit rating agency which assigns these rating to different countries
  2. The credit rating reflects the economic and political stability of a country.
  3. The rating upgrade comes after a gap of 13 years, Moody's had last upgraded India's rating to Baa3 in 2004. In 2015, the rating outlook was changed to positive from stable.
  4. The global ratings agency, however, cautioned that high debt burden remains a constraint on the country's credit profile.
  5. Moody's Investors Service upgraded the Government of India's local and foreign currency issuer ratings to Baa2 from Baa3 and changed the outlook on the rating to stable from positive
  6. In a statement, Moody's said that the reforms will foster sustainable growth prospects
  7. It has added that the reform programme will complement the existing "shock-absorbance capacity" provided by India's strong growth potential and improving global competitiveness
  8. Other important measures which have yet to reach fruition include planned land and labour market reforms,the agency said
  9. Moody's noted that, the fading of disruption assisted by recent government measures to support SMEs and exporters with GST compliance, real GDP growth will rise to 7.5 per cent next fiscal, with similarly robust levels of growth from FY2019 onward.
  10. The rating agency also said that India's growth potential is significantly higher than the most other baa rated sovereigns.