By TIOL News Service

NEW DELHI, NOV 17, 2017 : The international credit rating agency, Moody's Investors Service ("Moody's") today upgraded the local and foreign currency issuer ratings of the Government of India, to Baa2 from Baa3. The agency also changed the outlook on the rating to stable from positive. Notably, India's rating was upgraded after a long period of 13 years. India's sovereign credit rating had been last upgraded in January 2004, to Baa3 from Baa1.

The upgraded ratings were welcomed by the government, which stated that such amelioration in ratings was is in recognition of major economic and institutional reforms undertaken by it, and that Moody's recognized such achievements of the government. Such reforms include the introduction of the path-breaking Goods and Services Tax (GST) regime, putting in place a sound monetary policy framework, measures taken to address recapitalisation of public sector banks and a number of measures taken to bring formalisation and digitalisation (The JAM agenda) in the economy.

Other achievements sought to be celebrated include the demonetization drive, the Aadhaar system of biometric accounts and targeted delivery of benefits through the Direct Benefit Transfer (DBT) system. Moody's also recognized the government's commitment to macro stability which reduced inflation, declining deficit and prudent external balance and Government's fiscal consolidation programme, resulting in a reduction of fiscal deficits from 4.5% of GDP in 2013-14 to 3.5% in 2016-17 and its consequential sobering impact on general government debt.