The upgrade pitch

India woos rating agencies

- RAKESH JOSHI

With V. Anantha Nageswaran, chief economic advisor to the Modi government, leading the charge, India is making a strong pitch for a sovereign ratings upgrade. The government is hopeful of an upgrade after discussing various rating parameters, such as the budget, fiscal targets and borrowings.

Nageshwaran has gone on record that a ratings upgrade will reduce the cost of borrowing. "A change in credit rating from even 'BBB-' to 'BBB+' by Moody's could reduce the cost of borrowing by 100 bps," he said in Lucknow recently. Politically, an upgrade will also help the government buttress its credentials of economic management during an election year. To start with, senior officials of the finance ministry have begun talks with executives of Moody's Investor Services. Moody's has rated the Indian economy at 'Baa3', the lowest investment grade. S&P and Fitch have rated India 'BBB-'. In their interaction, the officials have highlighted the fact the outlook for India is stable though other emerging economies were rated higher than India. Moody's, according to officials, has acknowledged the positives of the Indian economy, but said a rating action won't be a knee-jerk reaction.