Moody’s outlook lift a thumbs-up to Modi Govt’s growth push: Binay Chandgothia, Principal Global Investors

In a chat with ET Now, Binay Chandgothia of Principal Global Investors talks about the likely impact of Moody’s India outlook revision on the markets and the economy. Excerpts:

ET Now: Moody’s outlook revision on India will put a smile on the faces of most bulls. What do you make of it?

Binay Chandgothia: It is a positive step. It reaffirms Modi government’s action over the past 12 months in terms of streamlining fiscal deficit and putting in place an independent monetary policy framework.

The rating affirmation and the outlook change are real positives for India.

ET Now: Will it open the taps of liquidity into the Indian markets that are already flush with funds?

Binay Chandgothia: It will. The biggest concern about India from a structural standpoint was its intentions in terms of fiscal management. Some of it has been addressed over the past 12 months.

The other big tension which made India very dependent on liquidity was the big current account gap. As things stand today, the current account might improve even further in the next two quarters or three.

The global market conditions continue to remain very benign. While the Fed is likely to tighten, ECB and Bank of Japan have come and made a big incremental change. So, liquidity is really not a concern for India in view of its structural growth story.

ET Now: What will change because of Moody’s action? Are you not of the view that despite this short-term positive, nothing has changed on the ground?

Binay Chandgothia: It is basically a sentiment booster. On the ground things do not change much, because the domestic corporate sector is not very much dependent on foreign capital to fund their plans.

Moody's action is good; it is a positive for India. It vindicates the path India has lately taken. But we need to see on-ground changes before India can realise its true growth potential.