Encouraging to gain international recognition: Jaitley on Moody rating

In the wake of India's rating being upgraded by global credit rating agency Moody, Finance Minister Arun Jaitley said it is "encouraging to gain international recognition and not something that's happening in isolation."

"India's rating has been upgraded from positive to stable after a gap of 13 years. It is a major international recognition of major economic and institutional reforms undertaken by the Government of India," he said while addressing a press conference here.

Further, Jaitley opined that Moody "rightly recognised" the structural reforms undertaken such as the Goods and Services Tax (GST), monetary policy framework, addressing PSB recapitalisation issue and measures taken to encourage formalisation and digitalisation in the economy.

Furthermore, Jaitley said the steps taken by the government in the last few years have contributed to the strengthening of the Indian economy, which ultimately lead to the upgradation.

He also added that the number of structural reforms that have taken place in the last three to four years have placed India "on the path of a high trajectory growth".

On the fiscal prudence front, Jaitley said as India continues on the path of fiscal prudence, more stability has been brought into the economy.

Earlier in the day, Moody's Investors Service ("Moody's") upgraded the Government of India's local and foreign currency issuer ratings to Baa2 from Baa3 and changed the outlook on the rating to stable from positive (India's sovereign credit rating was last upgraded in January 2004 to Baa3 (from Ba1))

Reports suggest that the global rating company said the reforms undertaken by the government would lead to an enhanced business environment, fuelling the foreign and domestic investment, and subsequently the growth momentum. It also noted that the reforms implemented reduced the risk of a sharp increase in debt, even in potential downside scenarios.

However, Moody argued that measures such as the GST, demonetisation, and others would need time to settle in, and the impact would be witnessed in due course of time. It also claimed that India's growth potential superseded that of many other sovereign nations.