Acknowledging the Indian economy?s resilience throughout the global recession, Moody?s Investors Service has upgraded the local currency government bond rating to Ba1 from Ba2. Moody?s has also affirmed India?s Baa3 foreign currency government bond rating, narrowing the gap between the local and foreign currency ratings to one notch. ?The upgrade of the local currency sovereign rating to Ba1 was prompted by the Indian government?s adoption of a medium-term (2010-2015) fiscal consolidation strategy, which is supported by a broadening structural reform programme,? said Aninda Mitra, Moody?s vice-president and the company?s lead sovereign analyst for India.
On March 18, S&P had raised India?s credit rating outlook to ?stable? from ?negative? on optimism that faster growth would help the government cut its Budget deficit.
Moody?s outlook on the local currency rating remains positive while that on the foreign currency sovereign rating remains stable. The other reasons that prompted the local currency ratings upgrade are the broad range of institutional and structural reforms. It also recognised the absence of any heightened recourse to non-market measures for financing the government?s large stimulus programme. India?s short-term issuer rating of NP was not affected by this rating action. Likewise, the country ceilings remain unchanged at Aa3 for local currency bonds, Baa2 for foreign currency bonds, A1 for local currency deposits, and Ba1 for foreign currency deposits.