India Optimistic About Sovereign Rating Upgrade: Report

Chief Economic Adviser (CEA), V Anantha Nageswaran, expressed his concerns about the global rating agency Moody’s Investors Service and their approach to rating parameters. In a meeting held in New Delhi, the CEA and officials from the financial ministry presented India’s perspective to senior executives from Moody’s. 

Government sources have stated that the CEA is optimistic about an upgrade in India’s ratings by Moody’s. The CEA raised questions to Moody’s about why countries like Indonesia have higher ratings than India, as reported by a leading media house. 

According to reports, the discussions with Moody’s were positive, and sources have indicated that Moody’s recognised the positive aspects of the Indian economy. 

Currently, Moody’s rates India at the lowest investment grade of “Baa3” with a “stable” outlook, which is similar to ratings given by other agencies like S&P, Fitch, and DBRS. 

Credit ratings, such as Moody’s, are used by sovereign wealth funds, pension funds, and other investors to assess India’s creditworthiness, which significantly impacts the country’s borrowing costs. 

India’s economy exhibited significant growth and performed better than expected in the quarter ending 31 March 2023. The GDP growth rate in Q4FY23 was 6.1 per cent, compared to 4.4 per cent in Q3. 

Overall, the growth in the fiscal year 2022-2023 was better than anticipated, standing at 7.2 per cent. However, it was lower than the 9.5 per cent growth witnessed in the previous fiscal year, 2021-2022. 

On 31st May, after the release of the GDP data, the CEA expressed their satisfaction, stating that they were pleased to have been able to present a narrative of sustained economic momentum along with stability in macroeconomic, financial, and fiscal areas. They further expressed their anticipation of another year of solid economic performance by India.