Representatives from global credit rating agency Moody's in their scheduled meet with Economic Affairs Secretary and other finance ministry officials expressed concern over the state of bad loans in the banking sector. Government on its part citing reforms and steps taken towards ease of doing business, pitched for a rating upgrade with Moody's.
The ministry impressed upon the global rating agency about the government's resolve to contain fiscal deficit at 3.5 per cent of Gross Domestic Product (GDP) in the current fiscal. It highlighted the passage in Parliament last month of the long pending Goods and Services Tax (GST) - billed as the biggest tax reform since Independence. With relaxation of thresholds for Foreign Direct Investment (FDI) and inflation targeting monetary policy, the finance ministry wants the US-based agency to upgrade the country's rating, lifting its credit profile.
However, in the meeting with Economic Affairs Secretary Shaktikanta Das and ministry, Moody's said that a rating upgrade could be a reality when the benefits of reforms could be felt on the ground and the country's banking sector stabilizes.
India's sovereign rating by Moody's stands at 'Baa3', the lowest investment grade just a notch above 'junk' status. In April last year, Moody's had changed India's rating outlook to 'positive' from 'stable' citing reform momentum and had said that it could consider India for an upgrade in next 12-18 months. Recently, it said that it could upgrade India's rating in 1-2 years if it is convinced that reforms are 'tangible'.