India's rating can be upgraded: Moody's

 A week after cutting India’s growth forecast for this year, global rating agency Moody’s on Tuesday said the rating could be upgraded if inflation stabilises, reforms go ahead, infrastructure investment are up and regulatory environment improves.

“India’s rating could be upgraded if Moody’s expectations of gradual but credit positive reforms are realised in actual policy implementation, and if the recent improvement in inflation, fiscal and current account ratios is sustained,” Moody’s Investors Service said.

“India’s Baa3 government bond rating reflects strong growth potential of its large and diverse economy, balanced against recurrent inflation, high fiscal deficits as well as regulatory and infrastructure constraints on competitiveness,” it said.

Moody’s has rated India at its lowest investment grade, Baa3 for over a decade. Baa3 is only a notch above junk.

Last week, the agency had said, fears of deficient monsoon rains and gradual progress of reforms have prompted it to lower India’s growth forecast for this year by 50 basis points to 7 per cent. “We assess India’s economic strength as ‘high’ relative to all other sovereigns we rate. The size of its economy, its growth rate and our expectation of continued economic growth support this assessment,” it said.