After 13 years, Moody’s upgrades India’s credit rating

New Delhi, November 17 : US-based Moody’s on Friday upgraded India’s sovereign credit rating by a notch to ‘Baa2’ with a stable outlook citing improved growth prospects driven by economic and institutional reforms. The rating upgrade comes after a gap of 13 years—Moody’s had last upgraded India’s rating to ‘Baa3’ in 2004.
In 2015, the rating outlook was changed to ‘positive’ from ‘stable’.
The ‘Baa3’ rating was the lowest investment grade–just a notch above ‘junk’ status.
“The decision to upgrade the ratings is underpinned by Moody’s expectation that continued progress on economic and institutional reforms will, over time, enhance India’s high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term,” Moody’s said in a statement.
The global ratings agency, however, cautioned that high debt burden remained a constraint on the country’s credit profile. “Moody’s believes that the reforms put in place have reduced the risk of a sharp increase in debt, even in potential downside scenarios,” it said.