Moody's ratings and Modi's expectations are finally on the same page

India's rating upgrade reflects growth story NITI Aayog

Prior to this rating action, HDFC Bank's BCA and ratings were constrained by India's previous sovereign rating of Baa3 given the bank's significant exposure to the government in common with other Indian banks.

Tyagi also said the rating upgrade to Baa2 would further boost investments including foreign inflows.

NEW DELHI:The rupee strengthened 64 paise to 64.68 against dollar in early trade on Friday after global rating agency Moody's Investors Service upgraded India's local and foreign currency issuer ratings to Baa2 from Baa3 and changed the outlook to stable from positive.

It is "encouraging to have global recognition" and "not something happening in isolation", he said.

"It's a recognition and endorsement of the reforms taken by the government particularly in the last three-four years..." Listing the series of reforms which led to the upgrade, he said while demonetisation took the economy towards greater formalisation and digitisation, use of Aadhaar ensured targeted delivery of government benefits.

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

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Credit rating agency upgrades India's sovereign bonds for the first time in nearly 14 years, changing its rating outlook to stable from positive. All these steps which constituted major reforms are directional in nature.

The four institutions with revised rating are Export-Import Bank of India (EXIM India), HDFC Bank, Indian Railway Finance Corporation Limited (IRFC) and State Bank of India (SBI), Moody's said in a statement.

Hitting out at opposition for criticising government's economic policies, Jaitley said that those who had doubts about India's reform process should seriously introspect on their position.

The upgrade is likely to have a positive rub-off effect on equities, rupee, and bonds, industry insiders said.

"It is an upgrade which has happened after 13 years". In 2015, the rating outlook was changed to "positive" from "stable". The country's sovereign rating has now moved a notch above Baa3, the lowest investment grade and just a level above junk rating, to Baa2.

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