November 24, 2017
India has moved up to 126 in IMF’s 2017 ranking of per capita GDP of global economies
Moody’s has raised the nation’s sovereign bond rating, after a gap of 13 years, to Baa2 from Baa3
India has jumped 30 steps to 100 in the World Bank’s Doing Business Report for the current year
Improving debt structure and reforms such as GST, Aadhaar and Demonetisation cited behind the upgrades
Foreign investors’ interest in India is expected to improve significantly following a series of ranking upgrades by leading international financial agencies. The upgrades – related to diverse parameters – reflect upon the successes of various reform measures undertaken by the Narendra Modi Government. The improved rankings have induced confidence in the fast-growing Indian economy, ascertaining the country’s position as a leading investment destination.
Earlier this week, the US-based International Monetary Fund (IMF) had released its World Economic Outlook report, which showed India climbing one spot to the 126th position in the 2017 ranking of per capita gross domestic product (GDP) of over 200 countries. The ranking based on purchasing power parity (PPP) confirmed the ongoing improvement in India’s economic prowess. Per capita GDP in India has improved by 7.2 per cent year-on-year to US$7,170 in 2017.
Meanwhile, Moody’s Investors Service has upgraded India’s sovereign bond rating for the first time in 13 years.The credit rating agency expressed confidence in the nation’s debt reduction efforts. On November 16, Moody’s raised India to Baa2 from Baa3 and changed the outlook on the rating to stable from positive. Moody’s cited Narendra Modi government’s “wide-ranging programme of economic and institutional reforms” as the reason behind the upgrade.
The reforms cited by the rating agency included the recently-introduced Goods and Services Tax (GST) as well as the government’s ongoing effort to curb non-performing loans in the banking sector. Other measures cited involved India’s demonetisation drive as well as the government’s initiative to link Aadhaar to nearly all essential services. These steps are expected to improve productivity, pushing up real GDP growth from 6.7 per cent in the current financial year ended March 2018 to 7.5 per cent in financial year 2018-19, followed by similar rate of growth in future.
Moody’s said that over the longer term, India’s growth potential was significantly higher than most other Baa-rated sovereigns. This comes as a vote of confidence for the government’s continuing effort to attract foreign direct investment (FDI). Earlier this week, Prime minister Modi had invited the ASEAN countries to increase their investment in India. Last year, the country recorded record-high FDI inflow worth around US$43.5 billion. Activities propelled by these investments are expected to help India overtake Japan as the world’s third largest economy by 2028, as per Bank of America Merrill Lynch.
Moody’s added that the country’s stable financing base for debt would likely contribute to a gradual decline in the general government debt burden over the medium term. The agency said that Indian government’s reforms have reduced the risk of a steep rise in debt, even in a potential downturn. Moody’s expects these measures to help improve India’s credit profile, while aiding India’s high growth potential.
On October 31, Prime Minister Modi had hailed India’s jump of 30 ranks to the 100th position in the World Bank’s Doing Business Report for 2018.This upgrade, along with the others, is a testament of the all-round and multi-sectoral reform push of Team India. Easier business environment is leading to momentous opportunities for entrepreneurs, particularly in the Micro, Small and Medium Enterprises sector. In line with this, the Government has welcomed the world to explore exciting economic opportunities in India.