Jaitley hopes for better credit rating after GCI boost

Union Finance Minister Arun Jaitley on Wednesday said he was hopeful global ratings agencies would take note of the significant improvement in India’s rank on the Global Competitive Index (GCI), and upgrade its sovereign rating.

India climbed 16 places to the 39th rank in the GCI, prepared by the World Economic Forum. “The landmark improvement in the global competitiveness rankings is a consequence of the structural reforms and policy initiatives taken by the government in the past two years and should be viewed as an encouragement to continue with the agenda of reforms,” Jaitley said.

He added that he expected a similar improvement in India’s ranking on the World Bank’s ease of doing business rankings index. Currently, India’s rank on the list is 130.

At present, India’s rank had the lowest investment grade from ratings agencies. A week ago, Moody’s had said it would consider a ratings upgrade, for the first time in two years, if it was convinced that recent economic reforms were tangible.

Finance ministry officials have questioned the methodology used by ratings agencies, especially as India was on course to implement the goods and services tax regime from April 1 next year.

“How much of depth do you want from our reforms? This is appearing like a bottomless pit. For seven years, we were told that GST hasn’t happened and now GST has happened, it has to be implemented on April 1, and everyone is working towards it,” the department of economic affairs is learnt to have told the ratings agency’s representatives.

In April last year, Moody’s had changed India’s rating outlook to “positive” from “stable”, citing reform momentum. It had said it could consider India for an upgrade in the next 12-18 months. India’s sovereign rating by Moody’s stands at “Baa3”, the lowest investment grade — just a notch above “junk” status.