Moody's upgrade well deserved for India's fiscal path: Chanda Kochhar

Hailing the upgrade made by US-based Moody's over India's sovereign credit rating, ICICI Bank CEO and MD Chanda Kochhar on Friday said that the decision will help in cementing the stability and sustainability of Indian economy's fiscal path.

"The reforms undertaken by the Moody's will boost the policy credibility. The framework and the formalization of the monetary policy committee illustrate some of the institutional reforms," said Chanda Kochhar while addressing a media briefing.

She added that India is well deserving for this upgrade by the Moody's, as the move will welcome capital flows in the country.

"On the banking front, the credit rating agency's commitment to recapitalize the banks and to formalize the Insolvency and Bankruptcy Code will go a long way to strengthen the banks and facilitate speedier resolution of the NPA's," added Kochar.

The global ratings agency, however, after a gap of 13 years has changed India's rating.

Earlier in 2004, Moody's had upgraded India's rating to 'Baa3'. In 2015, the rating outlook was changed to 'positive' from 'stable'.

Adding to this, she said that the upgrade will boost confidence in the way Indian government looks at boosting the economy, which will lead to higher capital flows and allocations.

Earlier in the day, Moody upgraded India's sovereign rating to Baa2 from Baa3 and changed the outlook to stable from positive, thus providing a much-needed impetus to the Modi government.

Reports suggest that the global rating company said the reforms undertaken by the government would lead to an enhanced business environment, fuelling the foreign and domestic investment, and subsequently the growth momentum. It also noted that the reforms implemented reduced the risk of a sharp increase in debt, even in potential downside scenarios.

However, Moody argued that measures such as the Goods and Services Tax (GST), demonetisation, and others would need time to settle in, and the impact would be witnessed in due course of time. It also claimed that India's growth potential superseded that of many other sovereign nations.