Finance Minister Arun Jaitley on Friday said India’s credit rating upgrade by Moody’s Investors Services will force those with doubts about India’s economic reforms to “seriously introspect on their positions”.
He made the statement hours after the credit rating agency upgraded India’s local and foreign currency issuer ratings to Baa2 from Baa3 and changed the outlook on the rating to stable from positive. Moody’s believes that the Indian government’s economic reforms, including the Goods and Services Tax and demonetisation, will enhance the country’s growth potential.
“We believe it is a belated recognition of all the positive steps that have been taken in India in the past few years,” the finance minister said, adding that the upgrade boosted the government’s “determination to follow the track that we have embarked upon”.
The ratings upgrade is the third positive reinforcement of the Centre’s policies in as many weeks, at a time when both Prime Minister Narendra Modi and his government have been criticised for their decision to demonetise 86% of the currency in circulation in November 2016 and for the implementation of the Goods and Services Tax.
On Wednesday, a study by American think tank Pew Research Center found that Modi was “by far the most popular national figure in Indian politics”. In October, the World Bank’s Ease of Doing Business report said India registered its largest jump on the index, moving up from 130 to 100 in just a year.
Bharatiya Janata Party National President Amit Shah said on Twitter that the upgrade reflected the government’s hard work. Former Economic Affairs Secretary Shaktikanta Das said, “It is good that Moody’s concluded that all reforms in India are long-term and deep-rooted.”
Niti Aayog CEO Amitabh Kant told The Economic Times that Moody’s upgrade proves that international agencies “recognise that India is carrying out a vast range of institutional changes but has maintained great amount of fiscal discipline in the system”.
“Doing business has been made easier, structural changes have been made, and these have all been recognised by Moody’s while making this upgrade, which to my mind was long overdue,” he said.