Giving a thumbs-up to Moody’s rating upgrade, India Inc today said the move is a reaffirmation of the government’s reforms push that will boost foreign capital inflows and lead to overseas borrowings at better rates.
The US-based Moody’s today upgraded India’s sovereign credit rating by a notch to ‘Baa2’ with a stable outlook, citing improved growth prospects driven by economic and institutional reforms. The rating action may act a catalyst of sorts for those foreign investors eyeing India, say analysts.
“The rating upgrade, along with the recently reported improvement in India’s ease of doing business ranking, underlines the fact that we are moving in the right direction. India’s growth story is more promising than ever and we see a further improvement in confidence level of global investment community,” Ficci President Pankaj Patel said.
According to Assocham Secretary General D S Rawat, the upgrade will make a huge difference to India Inc’s capacity to tap global financial markets at very competitive rates.
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“With reinforcement of the perception of being a prudent and growing economy, India would continue to attract foreign funds, both in the form of FDI and FII,” Rawat said, adding that other global rating agencies are expected to follow a similar path.
“The upgraded rating of Baa2 will enable lower cost of borrowing in international markets for Indian businesses and attract more foreign funds flows into India. CII hopes that the other rating agencies will soon follow with similar rating upgrades,” CII Director General Chandrajit Banerjee said.
The rating upgrade comes after a gap of 13 years – Moody’s had last upgraded India’s rating to ‘Baa3’ in 2004.
In 2015, the rating outlook was changed to ‘positive’ from ‘stable’.
The ‘Baa3’ rating is the lowest investment grade — just a notch above the ‘junk’ status.