Rating upgrade was long overdue

Moody's expects India's growth rate to improve from 6.7% in 2017-18 to 7.5% in 2018-19 and to stay at that level thereafter

Moody’s rating upgrade of India is a shot in the arm for the Narendra Modi government. The upgrade will help lower the cost of funds for Indian companies. It will increase foreign inflows into India as portfolio flows are linked to sovereign ratings. It will allow the government to be a little more relaxed about meeting its fiscal deficit target for this year.

Is an upgrade justified at this point? Not if you go by a range of today’s economic indicators. The current account deficit is well within control. But the combined fiscal deficit of the Centre and the states is