Finance ministry officials today met senior executives of Moody’s as they were looking to push for an upgrade in the rating backed by robust growth outlook, moderating inflationary pressure and other strong macroeconomic gauges.
India’s key officials discussed borrowing, disinvestment targets and state budgets with Moody’s today, the finance ministry official, who didn’t wish to be named, told ET Now.
Consultations and reviews between governments and rating agencies are commonplace. Nonetheless, like in previous instances, the meeting between FinMin officials and Moody’s on Friday is unlikely to bear fruit, Madan Sabnavis, Chief Economist, Bank of Baroda, had told ET Online.
Moody’s has retained its sovereign rating for India at the lowest investment grade of “Baa3” with a “stable” outlook.
Also Read: India is a bright spot. Why can’t foreign rating agencies see that?Moody’s on Thursday had said the key factors for India’s fiscal strength and credit profile will be debt affordability and projected a downward trend for the debt burden. “As long as nominal GDP growth holds, India’s debt burden will be stable or decline slightly,” Moody’s said.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.
Ratings play a significant role in how global investors gauge the country’s creditworthiness and also impact the borrowing costs. The ratings hold importance for Indian companies that wish to borrow money from overseas, as it is believed by many that the rating of a company cannot be better than its country.
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.
India’s gross domestic product (GDP) crossed $3.5 trillion in 2022. Economists have opined that India will be the fastest-growing G-20 economy over the next few years. While multiple countries continue to struggle with higher inflation post-pandemic, India is seen to be on a much more stable footing.