Close X
Friday, November 29, 2024
ADVT 
India

Arun Jaitley Promises More, As Moody's Turns Positive On India

Darpan News Desk IANS, 09 Apr, 2015 11:07 AM
    Sixteen months after it warned of a downgrade, ratings agency Moody's on Thursday raised its outlook on India to positive, hoping for further steps from the Narendra Modi government to push growth. The finance ministry said this was significant and promised more.
     
    "India has grown faster than similarly-rated peers over the last decade due to favourable demographics, economic diversity, as well as high savings and investment rates," Moody's Investors Service said, adding that this will keep the country's economic expansion on track.
     
    "Moody's decision to revise the ratings outlook to positive from stable is based on its view that there is an increasing probability that actions by policy-makers will enhance the country's economic strength and, in turn, the sovereign's financial strength over coming years."
     
    The agency, however, did not raise the sovereign credit rating from Baa3, awaiting more signs from the Indian economy. In December 2013, during the tenure of the United Progressive Alliance (UPA), it had warned of a downgrade that would have potentially hurt India's global standing.
     
    But Moody's specified what could lead to an upgrade. "Evidence over the coming months that policymakers are likely to be successful in their efforts to introduce growth-enhancing and growth-stabilising economic and institutional reforms would lead to the rating being considered for an upgrade."
     
    Reacting to the development, Finance Minister Arun Jaitley said: "Moody's has changed the rating outlook to positive from stable and affirms Baa3 rating. The upgrade in outlook is significant, but we've got to do more."
     
    The markets reacted positively. The sensitive index (Sensex) of the Bombay Stock Exchange (BSE) rose 177.46 points or 0.62 percent, to close at 28,885.21 percent.
     
    Moody's said its Baa3 rating reflects the fact that higher levels of growth and infrastructure development will be accompanied by better prospects, adding credit improvements over the next 12-18 months will depend on the extent to which growth, policies and buffers can contain risks.
     
    "India's Baa3 government bond rating incorporates the credit strengths, such as its diversified economy, robust growth prospects, relatively high domestic savings rate and a high international reserve buffers," it said.
     
    "It also reflects India's weaker performance, relative to peers, on fiscal, inflation and infrastructure-related metrics. And while policies are beginning to address each of these factors, the extent of likely improvements is as yet unclear," it said.
     
    "Moreover, India's banking system's asset quality, loan loss coverage and capital ratios are relatively weak," it said, and added this posed credit risks because of the financial sector's role in financing growth and the government's deficits.
     
    "In the absence of any improvement in banking-system metrics over the coming months, India's sovereign credit profile will remain constrained."
     
    Another international rating's agency Fitch Ratings also affirmed India's long-term outlook as stable. The agency in its foreign and local currency issuer default ratings (IDRs) has placed India at 'BBB-'.
     
    Industry lobby Federation of Indian Chambers of Commerce and Industry (FICCI) said the latest upgrade in India’s sovereign rating by the Moody’s and affirmation of stable rating by Fitch reflects the improving outlook for Indian economy on the back of various reform measures taken by the government.
     
    “The new ratings will further uplift global investor sentiment and help in attracting greater foreign investments across the board," said Didar Singh, FICCI secretary general.
     
    "To sustain investor interest, implementation remains the key. We hope that the reform momentum shall continue with an emphasis on long-term socio economic development," Singh added.

    MORE India ARTICLES

    Gurbani Festival In Delhi From Friday

    Gurbani Festival In Delhi From Friday
    Singers like Jaspinder Narula, Madhup Mudgal and Neele Khan will perform kirtan and gurbani at a three-day festival beginning here on Friday, the organisers said.

    Gurbani Festival In Delhi From Friday

    Sania And Saina Symbols Of Woman Power

    Sania And Saina Symbols Of Woman Power

    Saina Nehwal has officially been anointed the No.1 woman player in world badminton. Sania Mirza i...

    Sania And Saina Symbols Of Woman Power

    When Will Rahul Return, Asks BJP; Soon, Says Sonia

    When Will Rahul Return, Asks BJP; Soon, Says Sonia
    The BJP on Thursday took a dig at Congress vice president Rahul Gandhi wondering when he will return but Congress chief Sonia Gandhi asserted that he will soon be back among the people.

    When Will Rahul Return, Asks BJP; Soon, Says Sonia

    Giriraj Remarks: Sonia Says Narrow Mindset, BJP For Ending Row

    Giriraj Remarks: Sonia Says Narrow Mindset, BJP For Ending Row
    Congress president Sonia Gandhi on Thursday dismissed union minister Giriraj Singh's "racist" remarks as stemming from a "narrow mindset" even as party members staged protests while the BJP sought the matter to be closed as he had expressed regrets.

    Giriraj Remarks: Sonia Says Narrow Mindset, BJP For Ending Row

    Advani Not To Address BJP Meet?

    Advani Not To Address BJP Meet?
    As the Bharatiya Janata Party (BJP) commenced its largest strategy meet on Thursday since coming to power at the Centre, veteran leader L.k. Advani is not likely to address the national executive meet.

    Advani Not To Address BJP Meet?

    300 More Indians To Be Evacuated From Yemen, Two Planeloads Arrive

    300 More Indians To Be Evacuated From Yemen, Two Planeloads Arrive
    Another batch of over 300 Indian nationals will be ferried to safety from Yemen, the government said on Thursday, as 358 Indians who arrived from the strife-torn country in two airplanes early on Thursday expressed relief to be back home and away from the constant bombings.

    300 More Indians To Be Evacuated From Yemen, Two Planeloads Arrive