Modi Ji on Moody.
Today as soon as I opened my Twitter account, #Moody was trending. It does sound like a troll hashtag against our Prime Minister but no, it isn’t. It is regarding the ‘good’ news- Moody’s Investors Service (“Moody’s”) has today upgraded the Government of India’s local and foreign currency issuer ratings.
To brief about Moody’s, it is a provider of credit ratings, research, and risk analysis. In layman language, Moody’s and other rating agencies (S&P and Fitch) are like a pseudo ‘World Bank’ types bodies which release statements and ‘analytical’ report from time to time.
A question of credibility in 2015
Notably, in 2015, Moody’s released a report stating India’s economic status to be set in Baa3 status which is the lowest investment grade and a notch above from ‘poorest’ status. Moody’s report was a warning for investors that the economy was not stable and the government was in under huge burden of debt. While some of BJP members took it as a fair warning while some bhakts and members questioned the credibility of Moody’s.
Moody’s has a history of facing occasional litigations and investigations from entities whose bonds it has rated on an unsolicited basis. It has been in news for such false reportings:
It was publicised that-‘Media and opposition parties are glorifying such less credible reports. The Government doesn’t need Moody’s to tell it that some hardliners need to be reined in. These are stunts to create an atmosphere against Narendra Modi.’
Moody’s reports have improved the ratings. “The decision to upgrade the ratings is underpinned by Moody’s expectation that continued progress on economic and institutional reforms will, over time, enhance India’s high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term”.
Moody’s upgrade India’s sovereign rating to BAA2 from BAA3 for 1st time since 2004.
Quite obviously, questions are again being raised about the credibility of Moody’s. If in 2015, the Government didn’t consider it valuable enough, shouldn’t it be considered futile now?
(Well, looking at the whole pomp and show in media by BJP, it seems like a valid point!)
What if it is another PR agency stunt for next elections? Or Moody’s report has been publicised like crazy because a lot of statements have been made regarding the failures of recent economic reforms and new regulations?
All’s well that ends well
In the end, it is something which has apparently published an IMPROVED status. With lack of infrastructure and red-tape, India was reportedly failing to attract investments. I don’t think any stray incidents, rhetoric or political commentaries would be affecting business decisions. The commercial facts and market forces matter and make more sense more for the investors.
If such news pulls out India from the third world category, we are more than happy and satisfied.
Bring on more such (even less credible) reports!