New Delhi:
The Moody’s Investor Service has on Friday upgraded India’s "local and foreign currency issuer ratings" to Baa2 from Baa3 with a stable outlook after 13 years gap.
The International rating agency has also upgraded India’s bond rating from ‘Positive’ to ‘Stable’ saying the reforms by the Union government have helped in reducing the risk of sharp debt increase.
“While India’s high debt burden remains a constraint on the country’s credit profile, Moody’s believes that the reforms put in place have reduced the risk of a sharp increase in debt, even in potential downside scenarios,” Moody’s said in a release.
The agency has also raised India's long-term foreign-currency bond ceiling to Baa1 from Baa2, and the long-term foreign-currency bank deposit ceiling to Baa2 from Baa3.
However, the short-term foreign-currency bond ceiling remained unchanged at P-2, but the short-term foreign-currency bank deposit ceiling has been raised to P-2 from P-3.
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The long-term local currency deposit and bond ceilings remain unchanged at A1, the Moody's said in its release.
The Moody's said it believes that "recent economic reforms offer greater confidence that the high level of public indebtedness which is India's principal credit weakness will remain stable, and will ultimately decline" even in the current event of shocks.
The agency the Demonetisation and GST will contribute to the further strengthening of India's institutions and enhance India's fiscal policy framework and strengthen policy credibility.
The Moody's, however, also warned that the rating could also face "downward pressure if the health of the banking system deteriorated significantly or external vulnerability increased sharply."
The Moody's rating came days after India jumped 30 places in World Bank's Ease of Doing Business global rankings due to sustained business reforms over the past several years.
India secured its highest ever 100th rank in the latest Ease of Doing Business report, last year the country was ranked at 130.
