Moody's upgrades India's ratings: 10 things you need to know

Moody's upgrades India's ratings: 10 things you need to know

Commenting on Moody's upgrading India to Baa2, from Baa3, he said it is a recognition that India continues to follow the path of fiscal prudence which has brought stability to the economy.

The agency also raised India's local currency senior unsecured debt rating to Baa2 from Baa3 and its short-term local currency rating to P-2 from P-3.

Jaitley said that it is encouraging that there is an worldwide recognition and this recognition firms our determination to follow the track that we have embarked upon. The decision to upgrade the ratings is underpinned by agency's expectation that continued progress on economic and institutional reforms will enhance India's high growth potential and will contribute to a decline in the government debt.

"It's a recognition and endorsement of the reforms taken by the government particularly in the last three-four years..."

Although Moody's acknowledged that the Indian economy has taken a beating as a result of the goods and service tax (GST) and demonetisation, it reckoned that both would turn out to be worthwhile in the long run. All these steps which constituted major reforms are directional in nature. "I am sure that many who had doubts would now seriously introspect on their own positions", he said in a jibe at critics of his government's reforms programme.

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Last year, India lobbied hard with Moody's for an upgrade, but failed.

The upgrade is likely to have a positive rub-off effect on equities, rupee, and bonds, industry insiders said.

Here are four main points based on which Moody's upgraded India's credit ratings.

Boosting investor sentiments, United States credit rating agency Moody's on Friday upgraded India's sovereign rating to Baa2 from its lowest investment grade of Baa3 after 13 years, a development Finance Minister Arun Jaitley said was "an extremely encouraging" global recognition of the structural reforms of last three years. The rating agency also assigned a stable outlook to SBI's DIFC branch.

The revision of the sovereign rating of India a notch above investment grade also lifted investors' sentiments at the Indian equity markets.

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