Belated, but welcome move by Moody's: NITI Aayog's Bibek Debroy

The chairman of the Economic Advisory Council and NITI Aayog member Bibek Debroy termed rating agency Moody's sovereign upgrade for India as belated, which "should have happened before".

"I would say it is belated. There is no reason why the upgrade should not have happened earlier. However, we do know that the rating agencies tend to have a bias against developing countries. The rating agencies have often rated developed countries much higher than the ratings they deserve," Debroy said in an exclusive chat with ET Online.

The rating agency revised India's sovereign rating a notch above the investment grade after a long gap of 14 years.
"Having said that I would say this is a welcome move and it does impact various things including investor sentiment, the cost Indian companies will have to bear abroad and is also an endorsement of the reforms that have been undertaken," Debroy added.

Amid increasing concerns over weakening GDP growth, Prime Minister Narendra Modi had recently reconstituted the Economic Advisory Council (EAC) under Debroy.

Moody's had a word of caution on India's upgrade: "The rating could also face downward pressure if the health of the banking system deteriorated significantly or external vulnerability increased sharply.

Debroy, however, seems unperturbed. "I am sure they will again endorse what is being done for the banking sector subsequently."
The government has agreed to infuse close to Rs 2.1 lakh crore in state-owned banks over two years, but the fineprint is yet to be worked out.

The banking sector is saddled with high NPAs, raising concerns about the sector in the country.

Moody's has also upgraded India's local currency senior unsecured rating to Baa2 from Baa3 and its short-term local currency rating to P-2 from P-3, according to a statement.