NEW DELHI: Moody’s Investors Service on Friday upgraded India’s local and foreign currency issuer ratings to Baa2 from Baa3 and changed the outlook on the rating to ‘stable’ from ‘positive’. The upgrade is a recognition of the major economic and institutional reforms by the government. Industry applauded the upgradation. “This move will not only give a further push to foreign investment inflows into the country but will also enhance our prospects of borrowing money abroad at better rates,” said Pankaj R Patel, president, Ficci.
Reflecting a positive mood of the business houses, Chandrajit Banerjee, director-general, CII stated that the upgraded rating of Baa2 will enable lower cost of borrowing in international markets for Indian businesses and attract more foreign fund flows into India. CII expects other rating agencies will soon follow with similar rating upgrades.
“Other rating agencies are likely to follow suit but may wait until the announcement of next year’s budget or later. The move is positive for stable capital inflows like FDI, foreign currency borrowings costs and for the rupee over the medium-term,” Gaurav Kapur, chief economist, IndusInd Bank said.
Moody’s has also upgraded select banking stocks including SBI. For India, public debt is mostly internal. Overseas investors account for only four per cent in the total government bonds and the majority of the investment comes from scheduled commercial banks and insurance companies. “The rating upgrade will have a profound impact on bond yields and lift the morose sentiments in bond market, apart from impacting the movements in domestic currency,” said Soumya Kanti Ghosh, group chief economic adviser, SBI.
“It clearly shows that the economy is turning the corner and poised for a big leap forward, highlighting the immense potential that India offers as a global investment destination,” said Sunil Bharti Mittal, founder and chairman, Bharti Enterprises.
Rana Kapoor, MD and CEO, YES Bank stated that such global ratifications will lower the cost of borrowing and boost investor confidence and conviction in the economy.