Chief Economic Adviser Arvind Subramanian on Friday said Moody’s rating upgrade was a “welcome development” and was “long overdue”.
“Moody’s rating upgrade is a welcome development but we also feel that it was long overdue. It’s a recognition of government’s economic reforms like GST,” Subramanian said.
“Government will do what it has to do on domestic front, jobs growth and investment revival,” he added.
In a major boost for the Narendra Modi government, Moody’s, one of the major ratings agencies has upgraded India’s sovereign ratings to Baa2 from Baa3 and has changed the outlook on the rating to stable from positive.
The upgrade is likely to have a positive rub-off effect on equities, rupee, and bonds, industry insiders said.
In an official note, Moody’s said the decision to upgrade India’s rating was based on the expectation that continued progress on economic reforms will enhance India’s high growth potential.
According to Moody’s, reforms like Goods and Services Tax (GST), Aadhaar and direct benefit transfer schemes among others have played a key role in the improvement of India’s rating.
The global ratings agency, however, cautioned that high debt burden remains a constraint on the country’s credit profile.
The upgrade comes after a gap of 13 years as Moody’s had last upgraded India’s rating to ‘Baa3’ back in 2004. In 2015, the rating outlook was changed to ‘positive’ from ‘stable’.