Moody’s ranking improvement of India has come as a big relief for Modi government when they are trying to justify slowdown in the economy .
What is Moody’s ?
Moody’s Investors Service provides international financial research on bonds issued by commercial and government entities. Moody’s, along with Standard & Poor’s and Fitch Group, is considered one of the Big Three credit rating agencies.
What is the scale of ratings?
What is India’s current rating as per the latest evaluation done by Moody’s?
Moody’s have improved India’s rating from Baa3 to Baa2 , which implies that India has high ability or acceptable ability to repay short term debt .
Reasons behind rating upgrade –
The decision to upgrade is underpinned by expectation that continued progress on economic and institutional reforms will , over time , enhance India’s high growth potential and its large and stable base for government debt and will likely contribute to a gradual decline in general government debt burden .
Moody’s expects real GDP growth to moderate 6.7% in the fiscal year ending in March 2018 . However as disruption fades GDP growth will rise to 7.5% in FY2018 . General government debt stood at 68% of the GDP in 2016 but the impact of the high debt load is already mitigated somewhat by the large pool of private savings available to finance government debt .