US credit rating agency Moody's on Friday upgraded India's sovereign rating to Baa2 from its lowest investment grade of Baa, while changing the outlook for the country's rating to stable from positive, and said its was based on the Indian government's "wide-ranging programme of economic and institutional reforms".
Echoing the government's views, Indian industry said on Friday Moody's sovereign rating upgrade was in sync with the various government reform measures over the last three to four years.
"Moody's upgrade of India's rating is a reaffirmation of the various reform measures undertaken by the government over the last three to four years and we welcome this move", said FICCI President Pankaj R. Patel.
"The ratings upgrade along with the recently reported improvement in India's ease of doing business ranking underline the fact that we are moving in the right direction. India's growth story is more promising than ever and we see a further improvement in confidence level of global investment community. This move will not only give a further push to foreign investment inflows into the country but will also enhance our prospects of borrowing money abroad at better rates," he added.
The rating agency simultaneously upgraded India's local and foreign currency issuer rating to Baa2 from Baa3.
"The decision to upgrade the ratings is underpinned by Moody's expectation that continued progress on economic and institutional reforms will, over time, enhance India's high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term," a Moody's Investor Service release said.
"The government has been constantly reviewing the Good and Services Tax post implementation to ensure a smooth transition. Further, the recently announced recapitalisation package for banks along with the earlier announced measures will expedite the resolution of stressed assets making space for fresh investments to kick- in," said Patel.
"Rating upgrade by Moody's Investors Service on India's sovereign bonds would make a huge a difference to India Inc's capacity to tap the global financial markets at very competitive rates," said Assocham Secretary General D.S. Rawat.
"With reinforcement of a perception of being a prudent and growing economy, India would continue to attract foreign funds both in the form of FDI and FII. Some of the recent steps like recapitalisation of banks, Good and Services Tax, taking off the Insolvency and Bankruptcy Code have gone quite well with the Moody's," he added.
"The ratings upgrade underlines the efficacy of the bold structural reforms undertaken by the government in recent years. It clearly shows that the economy is turning the corner and poised for a big leap forward, highlighting the immense potential that India offers as a global investment destination. More importantly, it also emboldens the government to stay true to the path of strong and transformational reforms in the coming days," said Sunil Bharti Mittal, Chairman, Bharti Enterprises.
"We believe that Moody's rating upgrade is a big boost for India, as it will improve sentiments around ease of doing business within local and global investors. This will also advance the government's objective of enhancing productivity and driving sustainable growth. Improvement in the credit profile will be a big positive for Indian companies and the government," said Sumeer Chandra, Managing Director, HP Inc.