Moody’s upgradation of India’s economic rating can be interpreted as a recognition of the raft of structural reforms unleashed by the current government over the last 3-4 years.
This is the first time in 13 years that the international rating agency has raised India’s assessment – to Baa2 from Baa3 – indicating that the economy has moved from ‘stable’ to ‘positive’, and is on a high growth trajectory.
Among the principal policy changes that have contributed to improving India’s rating are the implementation of a comprehensive reforms programme, including introduction of the GST, the Aadhaar system of biometric accounts, direct benefit transfer schemes and measures to address bad loans.
The upgradation essentially means that the cost of international borrowing will now become cheaper for the Indian government and Indian corporates, and also lead to a surge in equity markets.
The report is also a timely one for the current dispensation, which has been under fire from the opposition for ‘irresponsibly’ implementing GST and demonetization.
Can Moody’s India upgrade be considered an endorsement of PM Modi’s economic reorganization? Does this imply that the BJP is making all the right – albeit tough – moves on economic policy?