Moody narrows gap between Indian and foreign currency bond
By siliconindia   |   Tuesday, 27 July 2010, 21:26 IST   |    3 Comments
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Moody narrows gap between Indian and foreign currency bond
HongKong: Moody, the international credit rating agency has upgraded Indian local currency government bond rating from Ba2 to Ba1 with a positive outlook. This has thinned down the discrepancy between the local and foreign currency bond ratings. India's ability to take up structural reforms and receive its public finances in order has been ever changing, reports Venkatesan Vembu from DNA. But what's significant is that there's a sea-change in how India's ability to undertake structural reforms and get its public finances in order are perceived today. There's also much greater confidence in the resilience of the Indian economy today. "The range of reforms being dealt with (in India) is more broad than anything I can recall in recent financial history," said Aninda Mitra, Vice-President and lead sovereign analyst for India, Moody. "The tax reforms have gotten a lot of traction and GST implementation looks like it's around the corner.. These are important markers from a credit standpoint," added Mitra. On being asked about Moody's ratings for local currency government debt lower than those of the two other leading agencies - Fitch and Standard & Poor's, Mitra explains that they have taken more cautious approach, and that's not necessarily a bad thing, given the history of fiscal slippages in India over a long period of time. An SLR hike, is punitive for the domestic banking system and for private borrowing. The government did not hike the SLR or resort to monetize deficit by the central bank.

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