The government will have to adhere to the policies announced with the upgrade of Moody's ratings

- Measures taken to increase foreign investment in the country by taking advantage of the opportunity

India's sovereign ratings have been stabilized by upgrading from negative to negative by global rating agency Moody's Investors Service. Policymakers' desire to upgrade India's ratings to Moody's has paid off. Earlier in May this year, the sovereign rating was maintained with a negative outlook of BAA2. In June 2020, the rating agency downgraded India from BAATU to BAA2 with a negative outlook. He attributed the decline to the slow pace of India's reform program and India's weak credit profile due to the Corona. However, banks and financial institutions now appear to be less risky for the country's economy. This has been made possible by the steps taken by the government and regulators and therefore India's outlook is being upgraded, Moody's said in its report.

After upgrading India's sovereign rating, the central government will not miss a single opportunity to claim that the country's economy is strong. Policymakers believe that Moody's rating upgrade will help attract foreign investment to the country, but our country's political structure may be a hindrance to policymakers' expectations, and the government may have to continue for a long time. . This upgrade has created a favorable situation for India at a time when our policy makers are in constant touch with various foreign nations for investment in the country. The rally in the country's stock markets has improved the mood of domestic investors and the rating agency's assumptions will boost foreign investors' desire to invest in India. India has long represented the world's rating agencies. Similar lobbying has been reported recently. The agencies are drawing attention to the fact that the country's economy is improving and the fiscal position is also getting stronger.

At a time when the Corona era is experiencing macroeconomic stability and growth, it is imperative that there be a change in the way people think about economic conditions a year ago. Global rating agencies are well aware that political interests can be an obstacle to the Indian government's economic reform. Due to the complicated political structure of our country, any government is reluctant to take the economic reform program to the final level as it wishes. An example of this is the earlier protests against the move to increase FDI limits in various sectors. A government with a majority in the Lok Sabha sometimes has to give a lot of time to move the program forward due to a minority in the Rajya Sabha. The present government wasted a lot of time in persuading many parties to implement GST.

Economic reforms in India are politically sensitive. The latest example is the new labor laws. The implementation of the new labor law formulated by the Center has not been possible due to the conflict of states. Moody's has upgraded its rating for India based on a number of criteria. The economy is in a recovery phase. With a few economic reforms, there is room for growth of more than 5 per cent.

The present government is moving in the right direction in making policy decisions which the previous government could not go through due to mixed politics. India's efforts to increase FDI in various sectors and to create a conducive environment to attract foreign investment and to improve fiscal discipline have generated a positive vote for India in the rating agency. This positive vote will be maintained only when the process undertaken by the government continues as planned or its expected results are seen. The government believes that it has become necessary to attract investment as it is under heavy financial debt.

A country's ratings also remain important for that country's industries. Global investors are speculating on which country the foreign-funded companies belong to and how strong the sovereignty of that country is. In such a scenario, it is the duty of the country's policy makers and political parties to see that the country's improved ratings are not tarnished and further improved in the future. Many of the changes still seen in the GST and the delay in the implementation of the new labor law could hurt investors.

Moody's rating upgrade has put pressure on the central government to control the country's fiscal deficit. It will be interesting to see what steps the government takes to curb the deficit amid rising crude oil prices. After the upgrade of Moody's, it has become necessary for the government to manage its policies carefully. Export policy in particular needs to be encouraged as economic growth is not possible without high exports and a weak growth rate could downgrade a country’s rating again, a fact.