Credit rating agency Moody’s Investors Service on Tuesday said it had upgraded India’s sovereign rating as the economy’s potential to grow is strong, stronger than most other countries, Mint reported.
The agency released a detailed answer after Opposition leaders from the Congress and the Communist Party of India (Marxist) downplayed its decision. Congress Spokesperson Randeep Surjewala had said both Prime Minister Narendra Modi and Moody’s had failed to gauge the “mood of the nation”.
Moody’s said it that although it had forecast that India would grow at 6.7% in 2017-’18, the country’s large and diversified economy and improving competitiveness in the global market would boost its capacity to absorb shocks.
“It will take time for the impact of most of the measures to be seen,” the rating agency said about the government’s decision to demonetise Rs 500 and Rs 1,000 currency notes and implement the Goods and Services Tax. “However, as disruption fades, we expect to see a rebound in real and nominal GDP growth to sustained higher levels.”
Moody’s said it made the decision to change the country’s rating to Baa2 from the lowest investment grade after the Narendra Modi government implemented the GST, the Financial Express reported. The agency believes that the new tax system will increase productivity by removing obstructions to interstate trade.