You have woken up to a Friday morning of good news. Moody's Investors Services an International rating agency which provides International Financial Research on bonds issued by Governments and Commercial Entities, has just upgraded India's Sovereign Rating.
India's Sovereign Rating has been upgraded from Baa3 to Baa2. The outlook on the rating has been changed to stable from positive. This is the first upgrade since 2004, a gap of 13 years. Moody's Investors Services popularly known as Moody's, is no small rating agency. It is a part of the BIG 3....Standard & Poor's (S&P), Moody's and the Fitch Group.
Stock markets in India reacted immediately. The 30-share BSE Sensex rose 336 points and the 50-share NSE Nifty went up 102 points. Stocks, bonds and the rupee also rallied. India has moved up from the lowest investment grade and is now in line with Italy and the Philippines. This is a major boost to the reforms introduced by Prime Minister Narendra Modi.
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So what's great if Moody's upgrades India's Sovereign Rating? This is a boost to the Modi Government. It is a sign that Government reforms are working. It shows that the business climate is improving, there is a boost in productivity, foreign and domestic investment is going up and lastly, there is a strong and sustainable growth in the economy.
1. Modi Government reforms a success
The Modi Government has been under fire in recent times. The opposition and the critics have called Demonetization and GST a massive failure.
Moody's has viewed demonetization as a positive move. Moody's has said that Demonetization and GST can reduce corruption in India, formalize the economy, increase tax collection and strengthen Indian Institutions and the economy.
The World Bank released the Doing Business (DB) report, 2018, on October 31st 2017. India jumped 30 points from 130 last year to 100, among 190 Nations. This jump along with the Moody's upgrade, have given a thumbs up to the Modi Government.
There are several benefits of a Moody's upgrade and let's take a look at some of them.
Moody's upgrade can be a big benefit to you and the common man. You seek jobs and Moody's upgrade will give you just that. Teachers, Doctors, Software engineers and even real estate can see more jobs. Companies would rapidly expand and increase hiring. This can only be good for you and other job seekers.
In a major boost to the Modi Government, ace investor Rakesh Jhunjhunwala has asked critics to shut up. Moody's upgrade shows Modi Government reforms are working. The Tax to GDP ratio has gone up from 16% to 18%. It could go to 20% by 2020. There is improved growth and performance in the economy. Ease of doing business has improved. India will attract a lot of foreign money.
Rakesh Jhunjhunwala says that what you are seeing is only a trailer. The bull market is not going anywhere. It is going to remain here for a long, long, long, long time.
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