Moody's had in 2015 changed rating outlook to "positive" from "stable".The rating upgrade comes within weeks of the World Bank handing a 30-place jump to India on its ease of doing business ranking to place it at 100th rank."We welcome (the upgrade) 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", Jaitley said.
Global rating agency Moody's has improved India's sovereign rating for the first time since 2004, citing state reforms to further enhance the economy's capacity to absorb shocks.
Stating that reforms will foster sustainable growth prospects, the US-based agency said the government is mid-way through a wide-ranging programme of economic and institutional reforms.
Moody's upgrading India's sovereign credit rating is a recognition of a series of reforms undertaken by the government, Commerce and Industry Minister Suresh Prabhu said on Friday.
Moody's Investors Service on Friday upgraded India's sovereign bond rating by a notch for the first time in 14 years, showing confidence in the Narendra Modi government's reform initiatives such as demonetisation, the goods and services tax (GST) and its efforts to resolve the bad debt asset crisis of banks. "Due to ratings upgrade will help in reducing our costs of crude oil imports on the other", Mukesh Kumar Surana, chairman and managing director Hindustan Petroleum Corporation Limited told The Hindu.
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As per analysts, foreign portfolio investments in India can increase in the coming days, external commercial borrowings will become cheaper, and more convenient. The upgrading by the influential American credit rating agency comes after almost 13 years, during which time India has attracted cumulative foreign direct investment flows of about $ 250 billion and net portfolio investments of over $ 225 billion into its stock and debt markets.
Moody's expects real GDP growth to moderate to 6.7% in the fiscal year ending in March 2018 (FY2017), but said in the longer term India's growth potential is significantly higher than most other Baa-rated sovereigns. "Indian bonds were already trading one notch higher". Some of the gains were clipped later in the day.
Over the last two years, India has been lobbying hard with Moody's for an upgrade.
Even if recent economic reforms have seen near-term negative growth impacts, there have been some benefits. "The reform program will thus complement the existing shock-absorbance capacity provided by India's strong growth potential and improving global competitiveness", the rating agency said in a statement.
Nifty Bank hit a fresh record high on Moody's changing the outlook on the rating to stable from positive.