Moody’s Investors Service upgrades India’s sovereign ratings

International rating agency Moody’s Investors Service has recently upgraded the Government of India (GoI)’s local and foreign currency issuer ratings to Baa2 from its lowest investment grade (Baa3) and changed the outlook on the rating to stable from positive. Moody’s has also upgraded India’s local currency senior unsecured rating to Baa2 from Baa3 and its short-term local currency rating to P-2 from P-3. The decision to upgrade the ratings is underpinned by Moody’s expectation that continued progress on economic and institutional reforms will enhance India’s high growth potential. Though, the global ratings agency cautioned that high debt burden remains a constraint on the country’s credit profile. Moody’s has revised the sovereign rating of India a notch above investment grade after a long gap of 14 years. Interestingly, the last time the global rating has revised the rating was when the BJP government led by Atal Bihari Vajpayee was in power.