Earlier this day US rating agency Moody upgraded India’s sovereign credit rating from ‘Baa3’ to ‘Baa2’ surging share market on a 236 point high and rupee appreciating. Additionally Moody has quoted ” A stable outlook for Indian Economy in future with enhanced growth prospects owing to economic reforms”.
While this news comes as a sigh of big relief for those who keep a keen eye on the Indian economy, because the past months and possibly the whole year round up since the announcement of Demonetization and GST rollout, have been cynical with multiple reports of an impending economic thrust owing to these decisions. Now with optimist predictions of Moody the stock market, Job market is high with hopes of better results and growth prospects in future.
While those favouring ruling side and its ministers cite this as the “long-term” benefit of demonetization that was cited in initial stages coming to shape or perhaps displaying a glimpse of the positive outcomes of demonetization which weren’t visible in its short span of implication. Critics and Opposition still remain cynical and claim this just to be another marketing gimmick or a mirage of development put up for the exhibition, meant to influence the voters of states going to elections in recent times, Specifically Gujarat. In a longer view, its claimed by the critics that its meant to be one of the many series of steps that would be undertaken to ‘misguide’ the Indian electorate into believing that “Acche Din” is indeed on the way.
While it’s showing a considerable effect in the present scenario, whether the predictions really turn out to be true remains to be seen in a matter of time. The rating up gradation has come across after an impending gap of 13 years, last time in 2004 the credit rating was set at “Baa3”. The reasons which compelled Moody to raise the bar can only be understood in their own words as quoted
” “The decision to upgrade the ratings is underpinned by Moody’s expectation that continued progress on economic and institutional reforms will, over time, enhance India’s high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term,”
Moody places the effect of ambitious economic reforms by the Government as reducing the risk of a sharp increase in debt even in a global scenario. According to Moody, a number of social reforms still in initial design phase might advance the objective of easing the business environment, enhancing productivity and stimulating FDI. Taxation reforms like GST will play a crucial role in eliminating inter-state trade barriers.
Perhaps such sugar-coated predictions have led Cynics to believe that Moody could be acting like a Government mouthpiece but the case is less likely due to the observation wherein same organization criticized Govt. policies at an earlier stage of the year. The implications can only be observed with time and learn. Until then Moody’s predictions and up gradation has sent a sigh of relief in the Indian Economic Scenario. Giving hopes to everyone.
Therefore the bigger Question will only be answered with the time that whether Moody is saying just Govt.’s “Mann ki Baat” or everyone’s “Kaam ki Baat”.