Moody's upgrades India's credit rating after 13 years

The US-based rating agency, Moody’s upgraded the sovereign credit rating of India on Friday giving hope to a rather slowed down economy. The credit rating was upgraded by a notch to ‘Baa2’ with a stable outlook on the back of an expectation of higher growth as a result of the economic and institutional reforms brought by the government.
 
The Indian economy that had been largely hit by demonetisation in the second half of FY17 is now grappling with issues related to the implementation of GST. However, the improved credit rating by the international agency has again instilled a wave of optimism in the market, sending S&P BSE Sensex and NSE Nifty50 higher by one per cent  in Friday's trading session.
 
The upgradation of India’s rating has come after a long gap of 13 years. The international agency had upgraded India’s credit rating to ‘Baa3’ in 2004, during the tenure of Atal Bihari Vajpayee as the Prime Minister. Further, in 2015, Moody’s changed the rating outlook of India from ‘stable’ to ‘positive’. The ‘Baa3’ rating is the lowest investment grade, just a level up from the ‘junk’ status. 
 
Moody’s stated that the rating upgrade is based on expectations that the reforms introduced in the economy will boost the country's growth potential and improve the government's finances. However, the credit rating agency also cautioned that the high debt burden of the country remains to be a constraint on its credit profile.