US credit rating agency Moody’s on Friday upgraded India’s sovereign rating to Baa2 from its lowest investment grade of Baa3 after 13 years. A day after Congress leader Kapil Sibal said the upgradation of India’s rating by US credit rating agency Moody’s was not in sync with the “mood of the people”. “Contrast the mood at Moody’s with the mood of the people. While you bask under their upgrade worry about livelihood millions have lost,” Sibal said in a tweet. “Moody talks about sunshine tomorrow. We are worried about the dark clouds today,” he said. Maintaining that the upgrading was based on New Delhi’s “wide-ranging programme of economic and institutional reforms”, Moody’s simultaneously changed the outlook for the country’s rating to stable from positive and upgraded India’s local and foreign currency issuer rating to Baa2 from Baa3.
While rating companies have lost some of their allure abroad after they failed to predict the financial crisis of 2008, they’re still considered a stamp of credibility in emerging markets, where local statistics can often be dodgy. Modi needs such a boost: he faces elections in his home state of Gujarat next month, where polls point to the closest contest in years. Voters are concerned about a lack of jobs and higher inflation after Modi’s decision last year to invalidate almost 90 percent of currency in circulation and the disruptive roll out of a consumption tax this July. Moreover, India’s financial assets have seen a sell-off over the past weeks