Moody's upgrade may widen trade deficit, impact exports already hit by GST

Since economists predict that the rupee will strengthen as a result of the upgrade, the export segment might find it difficult to grow as a result

While the government cheers India's ratings upgrade by global ratings agency Moody's, the move might further widen the already yawning trade deficit.  

Moody's Investors Services on Friday upgraded India's sovereign ratings from the lowest investment grade to a notch higher, in a vote of confidence in the Narendra Modi-led government's decisions on demonetisation, the introduction of the Goods and Services Tax (GST), and measures to resolve banks' bad asset issue, among other reforms.

This is expected to shore up international investors' confidence, translating into higher levels of foreign direct investment (FDI) into India.

Since economists predict that