Moody’s Investors Service upgraded India’s sovereign credit rating for the first time in nearly 14 years on Friday, saying continued progress on economic and institutional reforms would boost the country’s growth potential.
The agency said it was lifting India’s rating to Baa2 from Baa3 and changed its rating outlook to stable from positive as risks to India’s credit profile were broadly balanced.
The upgrade, Moody’s first of India since January 2004, moves the rating to the second-lowest investment grade, one notch higher than Standard & Poor’s and Fitch, which have kept India just above “junk” status for a decade and more.
The decision by Moody’s is a plaudit for Prime Minister Narendra Modi’s government and the reforms it has pushed through, and comes just weeks after the World Bank moved India up 30 places in its annual ease of doing business rankings.
Indian stocks, bonds and the rupee rallied.
“It seems like Santa Claus has already opened his bag of goodies,” said Lakshmi Iyer, head of fixed income at Kotak Mutual Fund.
Finance Minister Arun Jaitley told reporters the upgrade was a “belated recognition” of the steps the government has taken to fix India’s $2 trillion economy.
