New Delhi, January 10
Amidst all the gloom and doom, there was a spate of good news for the economy today. Global ratings agency Moody’s upgraded India’s rating, FDI in single-brand retail was notified, the stock markets were up by more than 2 per cent, FDI flows went up by 56 per cent in November, the rupee hit a one-month high and indirect tax collections were up 16 per cent.

Inflation, the government’s biggest cause for concern, is also coming under control. It has been moderating over the past few weeks and last week it even turned negative for the first time in six years.

In a move that will provide comfort to foreign investors, Moody’s today upgraded India’s short-term foreign currency rating from speculative to investment grade.

In a world where economic uncertainty prevails in several countries, especially in Europe, the upgrade for India will soothe investor nerves who closely follow the actions of rating agencies for making investments and allocating capital and for assessing the safety and security of a country’s economic environment.

Moody’s has upgraded four categories of bonds and bank deposits. It upgraded the rating on the long-term government bonds denominated in domestic currency from Bal to Baa3 (from speculative to investment grade. Moody’s had upgraded the short-term government bonds denominated in domestic currency from NP (Not Prime) to P-3 (from speculative to investment grade). The short-term rating had been upgraded for the first time since it was newly assigned in 1998, a Finance Ministry statement said.

In its rationale for the upgrade, Moody’s has underlined some of the government’s efforts at fiscal consolidation. “The government eliminated petrol subsidies and changed the way fertiliser subsidies are calculated, which may yield some budgetary savings. There have also been initiatives on the revenue front involving simplification (and hence hoped-for improvements in compliance) of indirect and direct taxes,” it said.

Even as FDI in multi-brand retail remains stuck, the government today formally notified 100 per cent FDI in single-brand retail under which foreign luxury brands will be able to set up wholly owned chains in the country.

On the opening up of single-brand retail, Commerce Minister Anand Sharma said foreign Investment up to 100 per cent has been allowed with the stipulation that in respect of proposals involving FDI beyond 51 per cent there would be a mandatory sourcing of at least 30 per cent of the total value of the products sold from Indian small industries/village and cottage industries, artisans and craftsmen.