Finance Minister Says Moody’s Upgrade Recognition Of Reforms

Finance Minister Arun Jaitley said Moody's Investor Service's first upgrade of India's sovereign rating in about 14 years is a belated recognition of reforms and strengthens the government's resolve to continue on that path.

“It's a recognition and endorsement of the reforms that have gone on in India, particularly in the last three years which has placed India on a path of high-trajectory growth,” Jaitley said at a press conference in New Delhi today. “I'm sure, many who had doubts in their mind about India's reform process will seriously introspect on their own positions.”

The rating agency upgraded credit rating to Baa2 to from Baa3, bringing Asia's third largest economy two notches above the junk grade. That comes even as the GDP growth slowed to its lowest in three years after last year's demonetisation. The Goods and Services Tax rollout in July was another disruption.

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While the GST and the note ban have contributed to the slowdown in the last six quarters, their benefits will be positive for the country in the medium to long term, according to the Moody's report.

The rating upgrade comes right before elections in Prime Minister Narendra Modi's home state of Gujarat. Jaitley refused to link the two. “Elections take place three to four times a year in this country and we can't take stable decisions if we link everything to elections,” he said.

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