A day after international agency Moody's upgraded India's credit ratings, Finance Minister Arun Jaitley today hit out at the critics and said those who have doubted India's economic reform process should seriously introspect their own position. The Finance Minister said that the upgrade is belated recognition of the steps that have been taken in the last few years. "Moody's have rightly recognised the structural reforms undertaken - GST, sound monetary policy framework, addressing PSB recapitalization issue, measures taken to bring formalization & digitalization in the economy," Jaitley said. He further said India continues to follow a path of fiscal prudence that has put a broad stability in Indian economy.
The government is banking on demonetisation and GST. The Finance Minister today reiterated that a series of steps including demonetisation is in fact formalising and digitalising the Indian economy. "Demonetisation has now got universal acceptance," Jaitley said. He also said that India is one of the few large countries which has taken structural reforms. "The GST is now universally regarded as a landmark reforms in the Indian tax structure," Jaitley said after Moody's in its report called the new tax regime as a landmark step that has removed the barriers to interstate trade.
Moody's upgraded India's ratings to Baa2 from Baa3 and changed the outlook on the rating to stable from positive after a gap of 13 years. India's sovereign credit rating was last upgraded in January 2004 to Baa3 (from Ba1). In its report, Moody's said that continued progress on economic and institutional reforms will, over time, enhance India's high growth potential. It said: "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."
The Finance Ministry has also issued a press statement, saying that Moody's has recognized the government's commitment to macro stability which has led to low inflation, declining deficit and prudent external balance and government's fiscal consolidation programme which has resulted in a reduction of fiscal deficits from 4.5 per cent of GDP in 2013-14 to 3.5 per cent in 2016-17 and its consequential sobering impact on general government debt. "Government intends to stay the course on fiscal consolidation in the medium term," the statement said.