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

    Indian President Confers Bharat Ratna On Vajpayee At His Home

    Indian President Confers Bharat Ratna On Vajpayee At His Home
    Former prime minister Atal Bihari Vajpayee was on Friday conferred with the Bharat Ratna, India's highest civilian honour, by President Pranab Mukherjee in a brief ceremony at his home here attended by the country's leadership.

    Indian President Confers Bharat Ratna On Vajpayee At His Home

    AAP Stares At Split As Internal Crisis Escalates

    AAP Stares At Split As Internal Crisis Escalates
    Less than two months after it stormed to power in Delhi, the AAP appeared set for a split with the party saying on Thursday that senior leaders Prashant Bhushan and Yogendra Yadav had quit its national executive and the two men vehemently denying this.

    AAP Stares At Split As Internal Crisis Escalates

    Aam Aadmi Party Says Prashant Bhushan, Yogendra Yadav Have Quit; They Deny

    Aam Aadmi Party Says  Prashant Bhushan, Yogendra Yadav  Have Quit; They Deny
    The rift in Delhi's ruling AAP escalated on Thursday with the party claiming that senior leaders Prashant Bhushan and Yogendra Yadav had quit its national executive but the two denied this.

    Aam Aadmi Party Says Prashant Bhushan, Yogendra Yadav Have Quit; They Deny

    'Slumdog Millionaire' Writer Vikas Swarup To Be New MEA Spokesperson

    'Slumdog Millionaire' Writer Vikas Swarup To Be New MEA Spokesperson
    Swarup, who shot to fame with his book "Q&A" which was adapted into an Oscar-winning Hollywood film "Slumdog Millionaire", is expected to take charge in April after Prime Minister Narendra Modi's return from his official visit to France, Germany and Canada.

    'Slumdog Millionaire' Writer Vikas Swarup To Be New MEA Spokesperson

    Kejriwal Wants To Be With Yes-men: Prashant Bhushan

    Kejriwal Wants To Be With Yes-men: Prashant Bhushan
    AAP leader Prashant Bhushan on Thursday denied that he and party colleague Yogendra Yadav had resigned from the party's national executive and accused Delhi Chief Minister Arvind Kejriwal of wanting to be with "yes-men".

    Kejriwal Wants To Be With Yes-men: Prashant Bhushan

    Woman's Body Cut In 16 Pieces Found In Garbage In Rae Bareli

    Woman's Body Cut In 16 Pieces Found In Garbage In Rae Bareli
    The body of a woman, cut into 16 pieces and packed in a bag, was found in a garbage dumping site in Rae Bareli, 95 km from here, police said on Tuesday.

    Woman's Body Cut In 16 Pieces Found In Garbage In Rae Bareli