Moody's upgrade, first in 14 years...

The Moody Credit Rating Investors Service Agency upgraded INDIA’s sovereign rating from Baa3 stable to Baa2 positive after a span of 14 years during the Atal Bihar Vajpaye – BJP term to again in the Narendra Modi term for the same party which might mean that the BJP style of functioning the economic machine has been viewed as superior to the rash style of the Congress.

However, this could be the first credit rating upgrade by any agency followed by others to confirm the pattern that INDIA has succeeded well in unclogging business and investment domestic and external by maintaining stability in the economic parameters since it acceded to power few years back amid gross mismanagement and dwindling growth which recovered during the current government even after the experimental demonetization and the GST with more room to changes according to the evolving situation and the required flexibility to arrive at the objective.   

All the economic indices improved during this government including the growth rate despite change in the methodology which the World Bank attributed as per the latest one to arrive at real-GDP and GVA with inflation, current account deficit and fiscal health under control coupled with burgeoning foreign investment and stock market.

Foreign investment has increased record during the BJP rule despite low domestic investment due to debt hangover and commercial banks’ bad assets.

The recapitalisation of the public sector ban was taken by Moody in the right spirit even though it could put some pressure on the government finances going ahead, but it saw it as helpful for domestic credit scene, both the banks capacity to resolve NPAs and push for loan growth.  

Nonetheless, the formalisation of the informal sector through cashless economy and digitisation would improve the transparency and public revenue.

Both, demonetisation and the GST moves have been viewed as important reforms which the rating agency praised.

Nevertheless, the upgrade in INDIA’s rating would further bolster credit and investment in the economy.