Moody’s Set to Raise India Credit Ratings

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Feb. 23 – India’s credit rating may be raised from junk if finance minister Pranab Mukherjee provides a comprehensive plan to roll back the fiscal stimulus and cut the budget deficit this week, said Moody’s Investors Service.

“If we think the exit path is well articulated and well executed, the local currency rating could be upgraded,” Aninda Mitra, a Singapore-based sovereign analyst at Moody’s, said in a telephone interview with The Economic Times.

Moody’s has placed India’s long-term local currency debt at Ba2; two levels below investment grade and at the same level as Armenia and Turkey. India has the chance to cut its budget deficit as economic growth increases tax revenue and asset sales are resumed.

According to the Prime Minister Manmohan Singh’s top economic adviser Chakravarthy Rangarajan, India’s budget deficit may narrow to 5.5 percent of gross domestic product in the financial year starting April 1 from 6.8 percent of GDP in the previous year.