Published: Sat, November 18, 2017
Business | By Max Garcia

Moody's boost to Modi & BJP

Moody's boost to Modi & BJP

Welcoming the move, Larsen & Toubro's MD & CEO S.N. Subrahmanyan, said private sector capital will still take some time to come back into the economy.

Global rating agency Moody's Investors Services has upgraded India's sovereign rating for the first time in almost 14 years, saying the country was poised for fast growth because of wide-ranging economic and institutional reforms by Prime Minister Narendra Modi's government.

"The ratings upgrade along with the recently reported improvement in India's ease of doing business ranking underline the fact that we are moving in the right direction. It should result in better investor sentiment towards India". "Usually, rating upgrades are anticipated 30-60 days in advance and the effect of the change lingers on till 30-60 days after the event".

Bond market euphoria over an unexpected India sovereign rating upgrade is expected to fizzle out next week, as concern over rising inflation, hawkish central bank rhetoric and fiscal discipline resurfaces.

The sovereign rating was lifted to Baa2 from Baa3. The agency raised doubts about the country's debt levels and fragile banks, and declined to budge despite the government's criticism of its rating methodology. Finance Minister Arun Jaitley termed the move as "belated recognition" of reforms undertaken by the government and said the reform agenda will continue with emphasis on higher spending on infrastructure and in rural areas. This is an outcome of various deep-rooted reforms that are taking place in the Indian economy.

As per the report, the RBI has been relentlessly sucking out liquidity since July 2017 through OMO. The economy is now going through a definite churn, and the rating upgrade augurs well for the country, the economy, and the business. It had in 2015 changed rating outlook to "positive" from "stable".

Mukesh Kumar Surana, CMD, HPCL told The Hindu, "As of now, HPCL has $1.6 billion of borrowings in foreign currency".

Moody's said the baseline risk of NHAI is closely related to the Indian's Government's financial strength.

This, according to the experts, would also help increase the attractiveness of Indian bond market.

"Moody's believes that the Modi government's reforms will improve the business climate, enhance productivity, attract more investment and put India on a higher growth trajectory", he said, adding "the country will soon achieve 7.5 per cent growth rate".

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