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Moody’s ratings ‘extremely encouraging’, endorses Centre’s reforms, says Jaitley

Union Finance Minister Arun Jaitley on Friday termed the upgrade in Moody’s ratings as “extremely encouraging” and also asked the…

Moody’s ratings ‘extremely encouraging’, endorses Centre’s reforms, says Jaitley

Union Finance Minister Arun Jaitley (Photo: Facebook)

Union Finance Minister Arun Jaitley on Friday termed the upgrade in Moody’s ratings as “extremely encouraging” and also asked the detractors to “introspect” their positions.

Addressing a press conference after Moody’s, one of the major ratings agencies upgraded India’s sovereign ratings to Baa2 from Baa3, Jaitley said the recognition will further the determination of the government to do better.

“It’s a recognition and endorsement of the reforms taken by the government particularly in the last three-four years… The structural reforms that have placed India on the path of a high trajectory growth,” Jaitley said.

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“Now that there is an international recognition is extremely encouraging and this recognition will further our determination,” he added.

Taking on the detractors who blamed the Goods and Services Tax (GST) and demonetisation for destroying businesses, Jaitley said reformative steps including GST and noteban contributed in the betterment of the ratings.

“Introduction of Aadhar, recapitalization of public sector banks, smooth transition of GST and demonetization have all been landmark reforms,” he said.

“All these reforms were directional… all steps that we have taken follow a particular roadmap… However, we must bear in mind that this is not something happening in isolation. For three years in a row, India is among the fastest growing major economies,” Jaitley said.

Taking on opposition, Jaitley said those who had doubts about the government’s reforms must introspect.

“Now after 13 years we get the ratings upgraded and I am sure many who had doubts would seriously introspect on their positions,” he said.

Apart from upgrading India’s ratings, Moody’s also 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 GST, Aadhaar and direct benefit transfer schemes among others have played a key role in the improvement of India’s rating.

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’.

The ‘Baa3’ rating was the lowest investment grade — just a notch above ‘junk’ status.

 

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