India has greater chance of rating upgrade in 12-18 months - Moody's

MUMBAI (Reuters) - India's chances of a sovereign rating upgrade over the next 12-18 months is greater as investments are expected to revive, growth to improve and inflation to stay modest, Moody's sovereign rating analyst Atsi Sheth said on Thursday.

Earlier in the day, Moody's upgraded India's sovereign rating outlook to "positive" from "stable", as it expects the actions by policymakers will enhance the country's economic strength in the medium term.

Sheth said the ratings agency would focus on implementation of infrastructure projects, policy support to investments and the banking sector's performance against bad loans for a rating upgrade.

"And now with the positive outlook, we're saying that over the next 12-18 months, if things continue to improve, the rating level might also go up," Sheth told Reuters.

"It is likely that there's a greater chance of rating going up than staying the same or going down."

Sheth said the biggest risks to India's rating upgrade could emerge from shocks to agriculture which have increased after the unseasonal rains in India's northern and central grain-growing parts before the harvest.

In addition, Sheth said global risk aversion, as well as inability of policymakers to proceed with reforms, could be the likely hurdles.

(Reporting by Neha Dasgupta and Suvashree Dey Choudhury; Editing by Subhranshu Sahu)