Moody's upgrades India's rating citing government reforms
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noksss
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Moody's upgrades India's rating citing government reforms
International rating agency Moody's has upgraded India's local and foreign currency issuer ratings to Baa2 from Baa3 and changed the outlook on the rating to stable from positive. The rating agency has cited the government's implementation of its reform programme which includes introduction of the Goods and Services Tax, Aadhaar system of biometric accounts and direct benefit transfer schemes and measures taken to address bad loans in the banking system.
The immediate impact of the rating upgrade is that the cost of international borrowing will become cheaper for Indian government and Indian corporates whose ratings are constrained by the sovereign rating. Issuers of lower rated paper have to pay higher rates to make up for the perceived credit risk. The move will also improve the sentiment in the equity markets.
"Moody's believes that those (reforms) implemented to date will advance the government's objective of improving the business climate, enhancing productivity, stimulating foreign and domestic investment, and ultimately fostering strong and sustainable growth. The reform program will thus complement the existing shock-absorbance capacity provided by India's strong growth potential and improving global competitiveness," the rating agency said in a statement today.
The upgrade comes as a major boost to the Narendra Modi government which has been under fire for the fallout of GST and demonetisation on business. "The decision to upgrade the ratings is underpinned by Moody's expectation that 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, and will likely contribute to a gradual decline in the general government debt burden over the medium term. In the meantime, while India's high debt burden remains a constraint on the country's credit profile, Moody's believes that the reforms put in place have reduced the risk of a sharp increase in debt, even in potential downside scenarios," said the rating agency in a statement.
Demonetisation which has been facing severe criticism after most of the currency was returned to banks has also been viewed positively by Moody's. "Government efforts to reduce corruption, formalize economic activity and improve tax collection and administration, including through demonetization and GST, both illustrate and should contribute to the further strengthening of India's institutions," the agency said.
On the fiscal front, efforts to improve transparency and accountability, including through adoption of a new Fiscal Responsibility and Budget Management (FRBM) Act, are expected to enhance India's fiscal policy framework and strengthen policy credibility. The other reforms which have helped in the upgrade is the legislation towards fiscal responsibility and the shift to a monetary policy committee for interest rate setting. "Adoption of a flexible inflation targeting regime and the formation of a Monetary Policy Committee (MPC) have already enhanced the transparency and efficiency of monetary policy in India. Inflation has declined markedly and foreign exchange reserves have increased to all-time highs, creating significant policy buffers to absorb potential shocks," Moody's said.
https://timesofindia.indiatimes.com...g-government-reforms/articleshow/61681086.cms
MOODY's STATEMENT
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https://www.moodys.com/research/Moo...ment-bond-rating-to-Baa2-from-Baa3--PR_374998
Rating Definitions
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@Nilgiri @Levina @nair @third eye @Skull and Bones @gslv mk3 @Rain Man @Joe Shearer @jbgt90 @SpArK
In just 3 years NDA has done all of the below to improve the credit rating
1) Controlling inflation
2) Adhering to fiscal deficit target even though its set by UPA
3) Foreign exchange reserve (400 billion)
4) Reforms to increase tax base and government revenue
5) Ease of doing business (world bank ranking)
6) Measures taken to address bad loans ( Empowering RBI , Insolvency and Bankruptcy Code)
7) Efforts to reduce corruption
Had the Harvard morons managing our economy have done atleast 3 - 4 points in the above list we wouldn't have lost a decade in our efforts to catch up to china . The funny part is these idiots still have the auadicty to question modi on his economic policies
Chhatrapati
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Many mutual fund managers believe Moody's rating upgrade has come at a right time for the market. They say the news comes at a time when the market participants were worried about a host of clouds gathering in the horizon: worries of rising oil prices, hardening of bond yields, rising inflation, etc. Though the upgrade is unlikely to change the fortunes of the market, it surely would lift the sentiment for some time.
International rating agency Moody's Investors Service has upgraded India's local and foreign currency issuer ratings to Baa2 from Baa3. Owing to the positive sentiment, The S&P BSE Sensex rose 235.98 points to reach 33,342.80 on Friday. The benchmark government bond yield dipped 12 basis points to open at 6.94 per cent on Friday.
"The market was extremely bearish the last couple of days which caused the benchmark 10-year to cross 7 per cent. But as we speak the yields are down 10 basis points. This is good news for long-term bond funds," says Dhawal Dalal, CIO- Fixed Income , Edelweiss Mutual Fund. The benchmark government bond yield crossed the 14-month-high of 7 per cent last week amid inflationary concerns.
"The rating upgrade by Moody's brings a positive sentiment to the market. The equity markets are reacting to the sentiment. We are hopeful of a change in interest rates in the debt markets," says Rajat Jain, CIO, Principal Mutual Fund.
The fund managers believe that the report will help India reinforce its stance as a pro-business nation and will increase international investment into the market. "The report by Moody's highlights that the international community is looking at India in a favourable manner which means we could see more FPI flows in the future. In fact last year also, we saw very strong international flows in the market," says Dhawal Dalal.
However, the rating change just reverses the negative sentiment in the bond markets for the time being. "We do not expect a lot of foreign flows as bond limits to invest remain almost fully utilized and equities continue to remain over-valued. The Indian Rupee also thus will remain in the broad average range of Rs 64-67 to the US Dollar that we have seen for more than 2 years," Arvind Chari, fund manager - fixed income, Quantum Asset Management.
Even though the rating upgrade provided some relief to the long and medium-term bond funds, investors shouldn't be very hopeful at this point, say fund managers. "The best of the India bond markets are behind us but at that time bond yields were at 6.3 per cent. At the current yields, the risk /reward seem balanced but yet investors should continue to maintain lower return expectations from Indian bonds," says Arvind Chari.
Dhawal Dalal expects Indian bond market to remain volatile for a while now. "If you are a long-term investor, some amount of allocation can be considered in the long duration funds. But given the market volatility, I guess dynamic bond funds are the best suited at this point," says Dalal.
Rajat Jian believes that the report by Moody's isn't going to change anything in the mid or long-term but government policies will surely reap better results in the future. "The report speaks about what has already happened. It doesn't have any future predictions. So, the positives in the report are already seen by the market. The policies that they are speaking about are surely going to help the economy and the market in the long term," says Rajat Jain.
//economictimes.indiatimes.com/articleshow/61690160.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
International rating agency Moody's Investors Service has upgraded India's local and foreign currency issuer ratings to Baa2 from Baa3. Owing to the positive sentiment, The S&P BSE Sensex rose 235.98 points to reach 33,342.80 on Friday. The benchmark government bond yield dipped 12 basis points to open at 6.94 per cent on Friday.
"The market was extremely bearish the last couple of days which caused the benchmark 10-year to cross 7 per cent. But as we speak the yields are down 10 basis points. This is good news for long-term bond funds," says Dhawal Dalal, CIO- Fixed Income , Edelweiss Mutual Fund. The benchmark government bond yield crossed the 14-month-high of 7 per cent last week amid inflationary concerns.
"The rating upgrade by Moody's brings a positive sentiment to the market. The equity markets are reacting to the sentiment. We are hopeful of a change in interest rates in the debt markets," says Rajat Jain, CIO, Principal Mutual Fund.
The fund managers believe that the report will help India reinforce its stance as a pro-business nation and will increase international investment into the market. "The report by Moody's highlights that the international community is looking at India in a favourable manner which means we could see more FPI flows in the future. In fact last year also, we saw very strong international flows in the market," says Dhawal Dalal.
However, the rating change just reverses the negative sentiment in the bond markets for the time being. "We do not expect a lot of foreign flows as bond limits to invest remain almost fully utilized and equities continue to remain over-valued. The Indian Rupee also thus will remain in the broad average range of Rs 64-67 to the US Dollar that we have seen for more than 2 years," Arvind Chari, fund manager - fixed income, Quantum Asset Management.
Even though the rating upgrade provided some relief to the long and medium-term bond funds, investors shouldn't be very hopeful at this point, say fund managers. "The best of the India bond markets are behind us but at that time bond yields were at 6.3 per cent. At the current yields, the risk /reward seem balanced but yet investors should continue to maintain lower return expectations from Indian bonds," says Arvind Chari.
Dhawal Dalal expects Indian bond market to remain volatile for a while now. "If you are a long-term investor, some amount of allocation can be considered in the long duration funds. But given the market volatility, I guess dynamic bond funds are the best suited at this point," says Dalal.
Rajat Jian believes that the report by Moody's isn't going to change anything in the mid or long-term but government policies will surely reap better results in the future. "The report speaks about what has already happened. It doesn't have any future predictions. So, the positives in the report are already seen by the market. The policies that they are speaking about are surely going to help the economy and the market in the long term," says Rajat Jain.
//economictimes.indiatimes.com/articleshow/61690160.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
noksss
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Another very important Step taken by modi on action against benami properties
On Tuesday, Central Board of Direct Taxes (CBDT) chairman Sushil Chandra said tax department would scrutinise everyone who had property valued above Rs 30 lakh. That can blow the cover on most benami properties. The recent crackdown on shell companies also involves action against benami properties held by such companies.
The concerted operations against benami property, both movable and immovable, have resulted in attachment of assets worth Rs 1,833 crore by the I-T department till October
But why has Modi not started with a big bang when a crackdown on immovable benami property can create a mass spectacle and get him major mass support?
Perhaps Modi has learnt his lessons from demonetisation. While the government expected a lot of illegal cash to just turn into worthless paper overnight, black-money hoarders deposited most of it with the help of conniving bankers.
A mega and sudden crackdown on benami property may fizzle out soon due to conniving officials and lack of institutionalised processes and, of course, data. After passing the law against benami property last year, the Modi government has taken several steps to identify and seize benami properties. Tax scrutiny of those owning property more than Rs 30 lakh in value is just one step. Generation of data on benami assets is another process that has begun.
A big crackdown on benami property will have the high visibility of demonetisation without any impact on common people. It can be more helpful to Modi in elections than demonetisation. Perhaps Modi wants to save it for the next Lok Sabha elections. He has pressed a cold start but can turn it into an all-out war at any stage. It can assume the proportions of a crackdown once the government has institutionalised processes and gathered and analysed enough data.
Modi's ability to turn government action into a big spectacle is not lacking in case of benami properties. He could be waiting for the right moment and the critical mass.
https://economictimes.indiatimes.co...d-be-a-big-bang-move/articleshow/61655424.cms
On Tuesday, Central Board of Direct Taxes (CBDT) chairman Sushil Chandra said tax department would scrutinise everyone who had property valued above Rs 30 lakh. That can blow the cover on most benami properties. The recent crackdown on shell companies also involves action against benami properties held by such companies.
The concerted operations against benami property, both movable and immovable, have resulted in attachment of assets worth Rs 1,833 crore by the I-T department till October
But why has Modi not started with a big bang when a crackdown on immovable benami property can create a mass spectacle and get him major mass support?
Perhaps Modi has learnt his lessons from demonetisation. While the government expected a lot of illegal cash to just turn into worthless paper overnight, black-money hoarders deposited most of it with the help of conniving bankers.
A mega and sudden crackdown on benami property may fizzle out soon due to conniving officials and lack of institutionalised processes and, of course, data. After passing the law against benami property last year, the Modi government has taken several steps to identify and seize benami properties. Tax scrutiny of those owning property more than Rs 30 lakh in value is just one step. Generation of data on benami assets is another process that has begun.
A big crackdown on benami property will have the high visibility of demonetisation without any impact on common people. It can be more helpful to Modi in elections than demonetisation. Perhaps Modi wants to save it for the next Lok Sabha elections. He has pressed a cold start but can turn it into an all-out war at any stage. It can assume the proportions of a crackdown once the government has institutionalised processes and gathered and analysed enough data.
Modi's ability to turn government action into a big spectacle is not lacking in case of benami properties. He could be waiting for the right moment and the critical mass.
https://economictimes.indiatimes.co...d-be-a-big-bang-move/articleshow/61655424.cms
Paranoid Android
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Rahul baba
he is disgusting SHITASHOKSo what? Answer these
what about Hunger Index?
what about loss in JNU?
what about Rahul Social media traction?
What about Gaurakshak?
What about 100+ death during demonitization?
why this upgrade before Gujarat elections?
Stop calling that false flag. He do not even know there is saffron in Indian flag.
a lot of pakistanis were happy that modi has messed indian economy
demand for BURNOL will go up
navtrek
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sarkar --> government
Great Sachin
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Great news ....more business / investments to come due to positive rating.
ashok321
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Just think; Why only Moody's upgraded India's rating but not Standard & poor's (bigger than Moody's) and Fitch?
Do I have to remind you that Modi had lobbied through a Singapore company to get upgrade from the same Moody's last year?
India lobbied Moody's for ratings upgrade, but failed - The Asian Age
Something is fishy.
Do I have to remind you that Modi had lobbied through a Singapore company to get upgrade from the same Moody's last year?
India lobbied Moody's for ratings upgrade, but failed - The Asian Age
Something is fishy.
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ashok321
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