Officials from the Finance Ministry, led by Chief Economic Adviser V Anantha Nageswaran, on Friday, met with credit rating agency Moody’s Investors Service in New Delhi to push for a sovereign rating upgrade, reported MoneyControl. Currently, the global credit rating agency Moody’s rates India at the lowest investment grade of “Baa3” with a “stable” outlook, similar to those assigned by S&P and Fitch at ‘BBB-‘. According to the report, a senior government official said, “Moody’s will take a decision on India’s rating upgrade in August in their internal meeting.”

As per the report, senior officials from key ministries held a meeting with Moody’s, including the Finance Ministry and NITI Aayog, earlier in the day. During the meetings, India’s ongoing economic reforms, emphasis on infrastructure development, significant forex reserves nearing $600 billion, controlled inflation, and other strong macroeconomic indicators were highlighted as factors warranting an upgrade. Officials also discussed borrowing, disinvestment targets, and state budgets with Moody’s.

“Moody’s acknowledged the positives of the Indian economy. Discussions happened on a positive note. They acknowledged the economy is doing well. India is hopeful of a rating upgrade,” another senior government official said, as per the report. 

According to a report by news agency Reuters, a government official said, “We have questioned them … how can Indonesia have a better rating than India.” 

Moody’s rates Indonesia’s sovereign credit rating at Baa2, a notch above India’s.

In the financial year 2022-23, India reported a growth rate of 7.2 per cent, ending on March 31, which stands as one of the highest among major economies. Additionally, India aims to reduce its fiscal deficit to 5.9 per cent of the gross domestic product by the end of the current fiscal year.

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Moody’s on June 15 said that the crucial factor influencing India’s fiscal strength and credit profile will be the affordability of its debt. The rating agency projected a downward trend in the debt burden and highlighted that as long as nominal GDP growth remains steady, India’s debt burden will remain stable or potentially decrease slightly.

“As long as nominal GDP growth holds, India’s debt burden will be stable or decline slightly,” the rating agency mentioned.

As per the report, earlier this year, the finance ministry officials had held similar talks with two other global rating agencies—Fitch and S&P. Investors closely monitor ratings as they serve as an indicator of a country’s creditworthiness and can impact borrowing costs.