Moody’s rating upgrade reaffirms Modi is doing good for India

Gunja Kapoor 22nd November 2017

In November 2016, when Moody’s Investors Service reaffirmed India’s credit rating to Baa3 - the lowest investment grade rating - on the back of high-debt burden, there was a certain group in the incumbent system that junked the rating agency's methodology since it was convinced that India deserved an upgrade.

One year hence, as Moody’s upgraded India’s sovereign ratings by one notch, keeping its methodology intact, this very group is in complete agreement with the outcome. Clearly, this group was desperate for endorsement from Moody's, and had little concern over the means.

So, what caused Moody’s change of heart?

The Rating Rational released by Moody's is based heavily on the reforms undertaken by the Modi sarkar. It believes these reforms will impact the sovereign in the following four ways:

One, the ability of reforms to translate into sustainable growth. Past three years of the NDA government has witnessed implementation of polices at an accelerated pace. It is true that majority of these policies were conceived by the UPA.

By ensuring these policies move from paper to people, the Modi government has earned the reputation of a “doer”. There is no denying that implementation of these policies is replete with instances of oversight. Three key reforms mentioned by Moody's - Aadhaar, demoneti...

Note: Views expressed in this blog are those of the author.