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USA’s Moody’s raises India’s rating outlook to ‘positive’

In a big vote of confidence in the Modi government, rating agency Moody’s on Thursday raised India’s credit outlook to ‘positive’, while Fitch projected faster growth -- raising hopes for an upgrade in its sovereign rating in the next 12-18 months.

India’s sovereign rating by Moody’s stands at ‘Baa3’, the lowest investment grade and just a notch above ‘junk’ status, while it earlier had a ‘stable’ outlook for the country. Fitch, which maintained its equivalent ‘BBB-’ rating with stable outlook, on the other hand projected 8 per cent Gross Domestic Product (GDP) growth for the current fiscal, higher than 7.8 per cent estimate of the RBI.

It also indicated positive rating action if the government follows its fiscal consolidation roadmap. Moody’s sovereign rating analyst Atsi Sheth said, “Our positive rating outlook for India reflects our view that the probability has now increased that over the next 12-18 months India’s sovereign credit fundamentals will improve to levels consistent with a rating higher than its current Baa3 rating.”

The sovereign rating and outlook of a country are often used by foreign investors and global bodies to gauge its investment climate.
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