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Moody's upgrades India's sovereign rating, boosts sentiments

Moody's upgrades India's sovereign rating, boosts sentiments

In the case of HDFC Bank, the rating agency has also upgraded the bank's baseline credit assessment (BCA) and adjusted it to Baa2 from Baa3, it said.

The agency also raised India's local currency senior unsecured debt rating to Baa2 from Baa3 and its short-term local currency rating to P-2 from P-3.

"Now after 13 years we get the ratings upgraded and I am sure many who had doubts would seriously introspect on their positions", he said.

"It is encouraging that there is an global recognition and this firms our determination to follow the path that we have embarked upon", he said. The report said: "Measures (GST, DBT and Demonetisation) will increase the degree of formality in the economy, broaden the tax base, and promote expenditure efficiency through rationalisation of government schemes and better-targeted delivery will support the expected, though very gradual, improvement in India's fiscal metrics over time". "It is a recognition and an endorsement of the process that India has undergone in the last three-four years where a number of structural reforms have placed India on a higher growth trajectory".

"Introduction of Aadhar, recapitalization of public sector banks, smooth transition of GST and demonetization have all been landmark reforms", he said.

Along with the rating upgrade, the Moody's also changed the outlook for India's rating to stable from positive. All these steps which constituted major reforms are directional in nature.

Within minutes of upgrade the Government's Chief Economic Advisor Arvind Subramanian tweeted, "Moody's India rating upgrade. 1. It is a major global recognition of major economic and institutional reforms undertaken by the Government of India", he said while addressing a press conference here.

The upgrade is likely to have a positive rub-off effect on equities, rupee, and bonds, industry insiders said.

Moody's has assigned a stable outlook to SBI's DIFC branch. The country's sovereign rating has now moved a notch above Baa3, the lowest investment grade and just a level above junk rating, to Baa2.

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