India is seeking to upgrade its sovereign credit rating, currently at the lowest possible investment level, as the Asian nation believes its economic metrics have improved significantly since the pandemic, a senior government official said on Monday.
The country’s finance ministry met with representatives of the three main rating agencies – Fitch Ratings, Moody’s Investors Service and S&P Global Ratings – after the government presented its annual budget on February 1, the official said.
“Our narrative is that our economic performance calls for an upgrade,” the official said, requesting anonymity because the discussions are private.
S&P and Fitch rate India ‘BBB-‘ and Moody’s ‘Baa3’, all indicative of the lowest possible investment grade, but with a stable outlook. These ratings are used to judge a country’s creditworthiness, which often impacts its borrowing costs.
They take into account parameters such as economic growth rate, inflation, general public debt and short-term external debt as a percentage of GDP, and political stability, among others.
The Indian government has shared its fiscal consolidation plan with the three agencies, which they found satisfactory, the official said.
The Department of Finance, Fitch, Moody’s and S&P Global did not immediately respond to a request for comment from Reuters.
India aims to reduce its budget deficit to 5.9% of GDP in the next financial year, from the target of 6.4% for the current year which ends March 31, and to reduce it further to 4.5% over the next three years.
India’s economic survey forecasts growth of 6% to 6.8% for 2023-2024, which would make it one of the fastest growing major economies in the world.