In 1987, Moody’s had given India an A2/ Prime 1 investment grade rating. India had survived Indira Gandhi’s assassination and Rajiv Gandhi’s government seemed focused on economic modernization. In its assessment of the Indian economy at the time Moody’s noted that: (a) India had a conservative tradition of keeping its external exposure within manageable limits; (b) that the government would maintain a steady pace in policy adjustment which would address such issues as the already high budget deficit and public enterprise inefficiency; and (c) it would undertake policy reform aimed at removing
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