Zee Media Bureau
Ahead of Prime Minister Narendra Modi's Europe visit, Moody's has raised India's credit rating outlook to stable, validating government's reform thrust and fiscal discipline.
Moody's Investors Service changed India's outlook to positive, saying there was an increasing probability that actions by policy makers will enhance the country`s economic strength and, in turn, the sovereign`s financial strength over coming years.
The ratings agency had improved the country's sovereign credit rating outlook from negative to stable in September last year indicating the possibility of a rating upgrade.
Moody's said it expected structural advantages, supported by relatively benign global commodity prices and liquidity conditions, will keep India's growth higher than that of its peers over the rating horizon.
The ratings agency affirmed India`s Baa3 rating.
The revision in outlook comes ahead of the Prime Minister's high profile visit to the Europe, which is aimed at procuring investments, among other things.
"The ability of policymakers to strengthen India's sovereign credit profile to a level consistent with a higher rating will become apparent over the next 12-18 months," Moody's said.
It said favourable demographics, economic diversity, as well as high savings and investment rates would act as structural advantage for India.
"Moody's India upgrade validates: government reform thrust, better growth, macro outlook, budget strategy of public investment, fiscal discipline," Chief Economic Advisor Arvind Subramanian tweeted.
The rating agency, however, said that recurrent inflationary pressures, occasional balance of payments pressures, and an uncertain regulatory environment have led to volatility in growth and exposed India to financial shocks, thereby constraining its credit profile.
"The recent measures to address inflation, keep external balances in check, simplify the regulatory regime for investors, increase foreign direct investment, and facilitate infrastructure development will reduce some of India's sovereign credit constraints," it said.
With Agency Inputs
