Finmin to pitch for rating upgrade to Moody's

Finance ministry officials, led by chief economic adviser V Anantha Nageswaran, will huddle with senior executives of Moody's on June 16 to push for an upgrade in its sovereign rating for India, a senior official said. They will cite India's robust growth outlook, moderating inflationary pressure and other strong macroeconomic gauges for the "well-deserved upgrade", he told ET.

Moody's has retained its sovereign rating for India at the lowest investment grade of "Baa3" with a "stable" outlook.

Earlier this year, the ministry had held similar meetings with two other global rating agencies-- Fitch and S&P. However, both maintained such ratings for India at the same level--"BBB-" with a "stable" outlook-- in their May reviews.

"The country will remain the world's fastest-growing major economy in the current fiscal and next. Retail inflation, including core inflation, has dropped considerably and current account deficit concerns have eased substantially," said an official, making a strong case for an upgrade for India. Fiscal deficit has been moderating and the Centre is committed to trim it further to 4.5% of GDP (from 6.4% in FY23) in FY26. States, too, have done well in reining in their fiscal gap.

"Even the Centre's debt level is expected to rise at a slower pace than the nominal GDP in the current fiscal, which means debt sustainability is not an issue," he said, adding that India's external debt remains at a very comfortable level.

While reviewing India's rating in May, S&P and Fitch conceded the country's strong growth outlook and external sector resilience compared with peers. At the same time, they also flagged the country's weak public finances, illustrated by high deficits and debt relative to peers, and elevated interest burden.