India said to bat for sovereign rating upgrade in review with global agencies

India is seeking an upgrade to its sovereign credit rating, currently at the lowest-possible investment grade, as the Asian nation believes its economic metrics have improved considerably since the pandemic, a senior government official said on Monday.

The country’s Finance Ministry met representatives from the top three 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 pitch is that our economic performance calls for an upgrade,” the official said, requesting anonymity as 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, often impacting its borrowing costs.

They take into account parameters such as economic growth rate, inflation, general government 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 have found to be satisfactory, the official said.

The Finance Ministry, Fitch, Moody’s and S&P Global did not immediately respond to a Reuters’ request for comment.

India aims to cut its fiscal deficit to 5.9% of GDP next fiscal year, from the 6.4% target for the current year that ends March 31, and to further reduce that to 4.5% in the next three years.

India’s Economic Survey has forecast growth of 6% to 6.8% for 2023-24, which would make it one of the world’s fastest-growing major economies.