Given that it feels its economic indicators of India have greatly improved since the pandemic, India is working to raise its sovereign credit rating, which is now at the lowest investment grade level. The finance ministry met with representatives from several credit rating agencies of world such as Moody's Investors Service, S&P Global Ratings, etc to present its yearly budget and make its case for an upgrade.
While determining a country's credit rating, credit rating agencies take into account a number of factors, such as political stability, short-term external debt as a proportion of GDP, general government debt, inflation, and economic growth rate.
India is currently rated "BBB-" by S&P and “Baa3" by Moody's. The lowest investment grade level is indicated by these ratings. However, the outlook is stable. An upgrade in credit rating would enhance India's creditworthiness and potentially lower its borrowing costs. Although India has been impacted by the COVID-19 pandemic, its economy has shown resilience and is on the path to recovery.
The government has taken measures to boost economic growth, including a significant stimulus package and other reforms. According to a senior government official, India's economic performance needs an upgrade, and the country has made considerable progress in various areas. The government has introduced structural reforms such as the goods and services tax and the Insolvency and Bankruptcy Code. An upgrade in credit rating would increase investor confidence in India's economy, improve its access to international capital markets, and help attract foreign investments, all of which are crucial for the country to achieve its development goals.
(Sources: Economics Times, Live Mint)
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