Moody's Investors Service ("Moody's") has today 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.
President of industry chamber Ficci Pankaj Patel said the development underlines the fact that India is moving in the right direction.
"The decision to upgrade the ratings is underpinned by Moody's expectation that continued progress on economic and institutional reforms will, over time, enhance India's high growth potential."
But at a press conference held after the news of the Moody's upgrade, Jailtley said, "We intend to maintain the fiscal glide path". Jaitley said that the Moody's rating is an endorsement of the economic reforms introduced by the Prime Minister Narendra Modi led government.
G Chokkalingam, Founder and Managing Director, of Equinomics Research and Advisory, said that the move is a big positive for the Indian economy. "It clearly shows that the economy is turning the corner and poised for a big leap forward, highlighting the vast potential that India offers as a global investment destination". HPCL said the firm would benefit from both lower borrowing costs and a stronger rupee. Government officials expressed hope that other credit rating agencies such as S&P and Fitch would follow suit.
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"After a gap of 13 years, global rating agency Moody's on Friday upgraded India's sovereign credit rating from its lowest investment grade to Baa2 and gave a thumbs up to two big-ticket reforms - demonetisation and GST â€" calling them remarkable. 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. "The Reserve Bank should cut rates on December 6 to signal a lending rate cut before the busy season with inflation well under control", Sen Gupta said.
Worldwide 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.
The BSE Sensex, which opened at 33,388.47 points, traded at 33,391.25Apoints (at 2.45 p.m.) higher 284.43 points or 0.86 per cent from the previous day's close at 33,106.82 points. "Longer term, India's growth potential is significantly higher than most other Baa-rated sovereigns", it said.
Even if recent economic reforms have seen near-term negative growth impacts, there have been some benefits.
"The intent of Modi government is to continue with its reform agenda", he said. "Moody's mood changes to upgrade India rating. Entire world is recognising "Sabka Saath, Sabka Vikas" Railways and Coal Minister Piyush Goyal said in a tweet.