Narendra Modi’s Government got a booster from global rating agencies on Thursday. While Moody’s revised its outlook for India to ‘positive’ from ‘stable’, Fitch reaffirmed its ‘stable’ outlook. A broad-based structural reforms agenda after a couple of years of limited progress was cited as the key reason.
Finance Minister Arun Jaitley termed the revision by Moody’s as a significant development, but said: “We have to do more.”
Chief Economic Advisor Arvind Subramanian felt the revision validates the government’s reform programme. “It also confirms something that we have been saying for some time now: that the growth and macro-economic prospects of the economy are improving,” he said.
Both Moody’s and Fitch kept the sovereign rating unchanged at ‘Baa3’ and ‘BBB-’, respectively. Moody’s also talked about the possibility of a rating upgrade in the next 12-18 months. Fitch’s unchanged outlook reflects a view that upside and downside risks to the ratings are balanced.
'Baa3’ and ‘BBB-are similar ratings, indicating the last investment grade. Normally, foreign investors make decisions on the basis of sovereign ratings. They also help companies in raising money overseas.