Close X
Monday, November 25, 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

    Bengal Nun Rape Case: Four Bangladeshi Suspects Held In Ludhiana

    Bengal Nun Rape Case: Four Bangladeshi Suspects Held In Ludhiana
    Four Bangladeshi nationals have been detained in Punjab's industrial city of Ludhiana in connection with the gang rape of an elderly nun in West Bengal last month, police said on Wednesday.

    Bengal Nun Rape Case: Four Bangladeshi Suspects Held In Ludhiana

    'Saffronisation' Imperative To Rectify Distorted Indian History: RSS Chief

    'Saffronisation' Imperative To Rectify Distorted Indian History: RSS Chief
    Condemning the calling of Indian revolutionaries as terrorists, RSS chief Mohan Bhagawat on Wednesday said "saffronisation" was imperative to rectify the country's "distorted history".

    'Saffronisation' Imperative To Rectify Distorted Indian History: RSS Chief

    Indian Minister Does It Again: Remark On Sonia's 'White Skin' Triggers Outrage

    Indian Minister Does It Again: Remark On Sonia's 'White Skin' Triggers Outrage
    Union Minister Giriraj Singh caused embarrassment to the government and triggered outrage on Wednesday with a racist remark about Congress president Sonia Gandhi's skin colour.

    Indian Minister Does It Again: Remark On Sonia's 'White Skin' Triggers Outrage

    Girl Shot Dead In Bengaluru School Hostel, Suspect Held

    Girl Shot Dead In Bengaluru School Hostel, Suspect Held
    A teenage girl was shot dead at a residential school hostel here allegedly by an office attendant. The suspect has been arrested, police said on Wednesday.

    Girl Shot Dead In Bengaluru School Hostel, Suspect Held

    Lights, Camera, Action! Bollywood-themed Eateries Trend Pan-India

    Lights, Camera, Action! Bollywood-themed Eateries Trend Pan-India
    Imagine gorging on 'Anda Apna Apna' or 'Chicken Tussi Great Ho" at a restaurant with walls splashed with Bollywood posters, dialogues and film memorabilia. Special-themed eateries across India are cashing in on the craze for everything Bollywood - films, songs and stars.

    Lights, Camera, Action! Bollywood-themed Eateries Trend Pan-India

    Minor Girl Raped In Delhi

    Minor Girl Raped In Delhi
    The girl was hospitalised after the incident in east Delhi's Preet Vihar on Saturday. The man took the girl from her house by telling her parents that he wants to feed "kanyas" (young girls) on the occasion of Hindu religious event Ram Navami, which marks the end of the nine-day Navaratri festival.

    Minor Girl Raped In Delhi