India’s credit rating to Baa2

Moody’s upgrades India’s rating, says reforms will foster sustainable growth US-based Moody’s has 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. Moody’s said in a statement, the decision to upgrade the ratings is underpinned by Moody’s expectation that continued progress on economic and institutional reforms will enhance India’s high growth potential.

It will also improve 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.

The global ratings agency, however, cautioned that high debt burden remains a constraint on the country’s credit profile.

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