Soaring Spirits: Moody's Recent Upgrade Makes the Indian Economy Bullish Again

MOODY'S UPBEAT

MOODY'S UPBEAT

Industry bodies in India welcomed the rating upgrade of India by Moody's while saying that this move will not only give a further push to foreign investment inflows into the country but will also enhance the country's prospects of borrowing money overseas at better rates. "This is also a huge positive for the Indian government and Indian corporates as it reduces borrowing costs for the government and will lead to lower credit risk premiums for corporates leading to cheaper cost of capital", Kochhar said. Rupee, bonds and stocks rallied after the ratings upgrade.

"It is a big boost for us and the reforms the government has pushed and comes just weeks after the World Bank moved India up 30 places in its annual ease of doing business rankings", said BJP strategists, who are grappling with the Gujarat poll scene. 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. All measures have been on track.

"SBI was always constrained by the country rating".

The upswing in the key indices came after the U.S. credit rating agency Moody's upgraded India's sovereign rating to Baa2 from its lowest investment grade of Baa, while changing the outlook for the country's rating to stable from positive, and said its was based on the Indian government's "wide-ranging programme of economic and institutional reforms".

"It also shows that Moody's has taken cognizance of our higher growth potential and increased economic resilience compared to other countries in our rating cohort", she said.

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Agreeing to Kochhar's views, Rana Kapoor, MD and CEO, Yes Bank, said: "Such global ratifications will lower the cost of borrowing and boost investor confidence and conviction in the economy". Finance minister Arun Jaitley has termed the upgrade as a "belated recognition" of reforms in the last few years, and vowed to continue them while maintaining fiscal discipline.

Complementing the reforms that government has taken particularly in the last year-and-a-half, he said: "I've not seen such strong macro fundamentals as we have today".

"MoodyƂ's ratings upgrade is a testimony of the fact that the government's roadmap of fiscal reforms is on the right path".

For Oil and Natural Gas Corp (ONGC), which enjoyed a rating higher than the sovereign, the foreign currency issuer rating has been upgraded to Baa1 from Baa2. But some economists said an upgrade from the other big rating agencies seemed unlikely.

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