Businessman hails ‘transformative reforms’ for India’s improved sovereign rating by Moody’s, says India is ‘doing well and will continue to do well’.
Industrialist Adi Godrej says while it’s good news that Moody’s Investors Service has upgraded India’s sovereign credit rating, such ratings do not do full justice to emerging economies.
“I won’t call it a bias, but I think they aren’t used to rating emerging markets,” the chairman of the Godrej Group told ThePrint in Mumbai Friday, hours after Moody’s upgraded India’s sovereign rating from the lowest ‘investment grade’ of Baa3 to Baa2, the first upgrade in 14 years.
Godrej called the upgrade a “compliment to the transformative reforms we have undertaken in the country”. He also said the ratings were great for India’s reputation, investment possibilities, and the country’s economy.
“The Moody’s ratings are an assertion that India is doing well and will continue to do well,” he said, also highlighting how stock markets were already reacting positively, and the world over, the reactions to India’s improved rating were very positive as well.
However, Godrej also faulted the ratings agency for failing to recognise the different circumstances that exist in developing countries, compared to developed nations. “I think they don’t take into account that sometimes things in emerging markets are quite different from developed countries, they forget sometimes,” he said.
In its statement on India’s improved rating, Moody’s had said: “The 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. While India’s high debt burden remains a constraint on the country’s credit profile, the reforms reduce the risk of a sharp increase in debt.”
Moody’s also upgraded four financial ratings after revising India’s sovereign rating, including the State Bank of India, the country’s largest public sector lender, HDFC Bank, the country’s largest private sector lender, Export-Import Bank of India, and the Indian Railway Finance Corporation. In line with India’s sovereign rating, the rating for these also saw an improvement from Baa3 to Baa2.