Modi’s Magic – Moody’s Upgrades India’s Rating After 14 Years

13 years since 2004, Moody International upgrades India’s rating establishing the credentials of Modi Government. The Firm cites major economic reforms as the main reason for rating upgrades.

Reforms by the Government will benefit in Long Term: Moody

Moody, which is an international rating agency has upgraded India’s rating from Baa3 to Baa2 and has changed the outlook on the rating from positive to stable. The international rating firm cited successful reforms like Goods and Services Tax, Biometric Aadhar system, Direct Benefit Transfer Scheme, action on Bad Loans and some small yet needed reforms in the system the key reason for the upgrades in ratings.

It took India 13 years for an improved rating which was last done in 2004 where the rating was upgraded to Baa3. Moody’s in a statement said that the reforms that are implemented to date will help India in getting cheaper loans and also for the Indian corporates. Those with lower ratings have to struggle getting loans and investment.

Reforms implemented to date will advance the government’s objective of improving the business climate, enhancing productivity, stimulating foreign and domestic investment, and ultimately fostering strong and sustainable growth, the rating agency stated on Thursday.

Systematic Reforms Increasing Transparency and Efficiency

Steps like demonetization was taken well by the rating agency citing that this steps help the country’s economy in moving towards formalization, transparency and improvement in tax collection. In the last few days, the government was on back foot due to the failures of demonetization as advertised by the opposition.

Steps like GST reform are taken in very positive term as it will bring maximum sectors into its ambit thus formalizing the economy benefiting India and its people in long term. The steps taken by the government to solve the bad loan problem was also welcomed by the Moody’s.

The government recently brought bankruptcy bill, insolvency bill and Fiscal Responsibility and Budget Management Act that will further boost the Indian economy. Apart from these, certain small steps taken by the government like ease in registering a company, getting a license and many more can also be counted as a reason for the improvements in the ratings.

Sensex and Nifty Sees a Huge Jump

The market after its opening saw a huge jump in BSE Sensex that rose by 381.75 points and the NSE Nifty jumped by 109.80. Presently NSE Nifty is trading at 10, 312.30 points while the BSE Sensex is trading at 33, 432.92 points. These huge rise can easily be credited to Moody’s report that improved the sentiments of market.