India asks Moody’s to upgrade rating, questions methodology


Rama Krishna Sangem

India on June 16 Friday asked for a sovereign rating upgrade with Moody’s besides questioning its parameters based on which the US-based agency accords ratings, sources said.

This request comes against the backdrop of Prime Minister Narendra Modi’s state visit to the US from June 21 to 24. PM Modi will be meeting a series of US investors meetings and seeking their presence in the country.

Ahead of its annual review of the sovereign rating, Moody’s Investors Service representatives met Indian government officials during which the officials highlighted the reforms and strong fundamentals of the Indian economy. A higher rating for India would mean the nation is less riskier, translating into lower interest rates on borrowings.

“Moody’s acknowledged the positives of the Indian economy. We are hopeful for a rating upgrade from Moody’s,” an official said after the meeting.  Moody’s Investors Service has a ‘Baa3′ sovereign credit rating on India, with a stable outlook. ‘Baa3′ is the lowest investment grade rating.

Apart from highlighting India’s ongoing economic reforms, government thrust on infrastructure development and forex reserves nearing 600 billion US dollars, government officials also questioned Moody’s on its rating parameters. Officials from all economy-related ministries and Niti Aayog attended the meeting.


Objections over Moody’s criteria

India has long been questioning the methodology adopted by international agencies while according credit rating and has nudged them to become more transparent and less subjective. It has been pitching for amendment in sovereign credit ratings methodology saying it should reflect economies’ ability and willingness to pay their debt obligations.

Moody’s representatives discussed the government’s disinvestment roadmap and officials highlighted that disinvestment should be seen from the prism of reform and not just revenue generation exercise.  In June 2020, Moody’s downgraded India’s rating to ‘Baa3’ from ‘Baa2’ with a negative outlook, citing weak reform push and slow growth. In October 2021, the outlook on the rating was revised to stable.

The government had largely met its fiscal objectives over the past two years. The fiscal deficit, which is the difference between government expenditure and revenue, narrowed to 6.4 per cent of GDP in 2022-23 fiscal, from 6.7 per cent of GDP in 2021-22 fiscal. In the current fiscal, the deficit is budgeted at 5.9 per cent of GDP.

As per the fiscal consolidation roadmap, the government intends to bring down the fiscal deficit below 4.5 per cent of GDP by 2025-26. Last month, two other global rating agencies S&P and Fitch had kept India’s rating unchanged at ‘BBB-‘, with a stable outlook.

All three global rating agencies — Fitch, S&P and Moody’s — have the lowest investment grade rating on India, with a stable outlook. The ratings are looked at by investors as a barometer of the country’s creditworthiness and impact borrowing cost.

Rama Krishna Sangem

Ramakrishna chief editor of excel India online magazine and website

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Rama Krishna Sangem

Excel India national news magazine is a media startup founded and piloted by Rama Krishna Sangem, a Hyderabad based senior journalist with over three decade experience in the field of media, mostly in print journalism. His rich experience in reporting for both Telugu and English newspapers and heading a TV news channel and some online outfits will be of immense use to this venture. Excel India English news magazine seeks to fill the gap of analytical understanding to our readers who today are confronted with myriad media platforms. Our online version not only offers regular updates and commentary on happenings around us, but also gives larger stories not limited by space constraints of a print magazine. Excel India is ably run by a team of senior journalists committed to values and quality standards in the profession. We urge you all to support and guide us in this endeavour. Reach us at