ALSO READEyeing ratings upgrade, Finance Ministry to list out economic achievements to Moody's Indian banking outlook stable; new NPA formation slow: Moody's Bad loan situation not alarming: Rai Rising FDI helping India narrow external finance needs: Moody's Moody's: GST, infra funding uphill climb
Citing reforms and steps taken towards ease of doing business, the Finance Ministry on Wednesday pitched for a rating upgrade with Moody's, while the US-based agency expressed concern over the state of bad loans in the banking sector.
At a meeting with Economic Affairs Secretary Shaktikanta Das and other officials of the ministry, representatives from Moody's are learnt to have 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 stabilises.
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.
India's sovereign rating by Moody's stands at 'Baa3', the lowest investment grade, just a notch above 'junk' status.
During the meeting, the ministry impressed upon the global rating agency about the government's resolve to contain fiscal deficit at 3.5 per cent of 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.
Armed with relaxation of thresholds for FDI and inflation targeting monetary policy, the finance ministry wants the US-based agency to upgrade the country's rating, lifting its credit profile.
The government in the past 3-4 months has also secured Parliament's approval for passage of the bankruptcy, Sarfaesi and DRT laws, besides the long pending GST.
Describing muted private investment and NPAs as speed- breakers amid slow reforms, Moody's had on Tuesday said it could upgrade India's rating in 1-2 years if it is convinced that reforms are "tangible".
It said evidence of policymakers working towards a faster fiscal consolidation, reducing the debt-GDP ratio and addressing infrastructure and monsoon volatility challenges will determine an upgrade, going forward.