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 ’’Many who had doubts in their minds about India’s reform process would now seriously introspect on their positions itself”.

NEW DELHI - Ratings agency Moody’s action to upgrade India’s rating is a belated recognition of the positive steps taken by the government over the past few years, according to Finance Minister Arun Jaitley.

Moody’s on November 17 upgraded the Indian government’s rating as a local and foreign currency issuer from Baa3 with a positive outlook to Baa2 with a stable outlook.

“This upgrade has come after 13 years, and we welcome this upgrade,” Mr. Jaitley said at a press conference. “We believe it is a belated recognition of all the positive steps taken over the past few years to strengthen the economy. It is an endorsement of the reform process, especially over the last two to three years.”

Mr. Jaitley added that the key initiatives acknowledged by Moody’s include demonetisation, the introduction of Aadhaar, the passage of the Insolvency and Bankruptcy Code, the creation of the Monetary Policy Committee, and the implementation of the Goods and Services Tax.

“It’s a welcome development but we also feel it was long overdue... it’s a recognition of the actions that the government has undertaken GST, bankruptcy, we also need to keep all these things in perspective,” Chief Economic Advisor Arvind Subramanian told reporters. “Government policies are dictated by what we have to do in terms of our own objectives, (such as) macro economic reforms, reviving growth. Ratings are not motivators of government action, but merely affirmation of that action.”

Regarding the action other ratings agencies will take, Mr. Subramanian said: “As far as what other rating agencies will do, I’d said that rating agencies have not been consistent between India and China. Let’s hope they are not inconsistent amongst each other.

The Finance Ministry officials reiterated the government’s resolve to maintain the fiscal consolidation path going forward.

“It is a vindication of the structural, institutional reforms and Moody’s has recognised it,” Economic Affairs Secretary Subhash Chandra Garg said. “The fiscal deficit consolidation, debt control and all, so everything which the government has done in the past couple of years has been recognised. They are projecting a little rise in the trajectory going forward so they are conscious of the real dynamics of the debt situation. We of course remain committed on the fiscal path.”

“We intend to move along the track we have set over the last three years on the fiscal path,” Mr. Jaitley added.
Key points from Mr. Jaitley’s speech

’’This is an upgrade that has happened after 13 years. We welcome this upgrade. We believe that it is a belated recognition of all the positive steps that have been taken in India in the last few years.’’

’’It is a recognition and an endorsement of the reform process that has gone on in the country, particularly in the last 3-4 years, where a number of structural reforms have taken place, placing India on a path of high trajectory growth.’’

’’It is also a recognition that India’s continues to follow a path of fiscal prudence that has brought rock stability to the economy.’’

’’The fact that a series of steps, including demonetisation, which are now taking the Indian economy to a greater formalisation and digitisation are something that is now being universally acknowledged.’’

’’Introduction of platforms like Aadhaar, extremely important steps like bankruptcy code, re-capitalisation of banks, setting up of statutory mechanism in terms of monetary policy committee, and most importantly smooth transition of GST... All these steps are directional in implementing economic reforms. All our steps follow a particular road map.’’

’’It is encouraging that there is an international recognition and this recognition firms up our determination to follow the track that we have embarked upon.’’
’Better records in Indian history’

’’If you look at our track record of three years, it has been one of the better records in Indian history as far as fiscal discipline is concerned, and we intend to move on that track.’’

’’This is not happening in isolation. For three years, India is among the fastest growing economies. In the World Bank ranking, we have moved up in ’ease of doing business’. These are no small achievements.’’

’’Many who had doubts in their minds about India’s reform process would now seriously introspect on their positions itself.’’

’’There will be an important emphasis now on implementation and on reaping the benefits of growth process in terms of expenditure, infra building, and improving rural areas.’’

’’We do not want to link this milestone with elections. There will be no stability if every initiative is linked to elections.’’

’’GST has opened the door for farmers and traders to sell their products throughout the country. Demonetisation has increased cashless transactions.’’