However, if the government slowed its fiscal consolidation plans or faltered on its reform implementation, the ratings agency would stabilise the rating at the current "Baa3," Diron said.
"What would potentially trigger an upgrade would be a faster progress in fiscal consolidation than we are currently expecting," Diron said in a telephone interview from Singapore. The ratings agency currently rates India at 'Baa3', the lowest investment grade rating, with a 'positive' outlook. Diron added Moody's was focussing on the credibility and effectiveness of the country's monetary policy framework more than on who the central bank governor was when asked about the re-appointment of the Reserve Bank of India Governor Raghuram Rajan to a second term.
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Forecasting economy to grow 7.5 per cent in the current and next year, Moody's Investors Service said the expansion is primarily driven by rising consumption and sustained improvement in private investment was needed to maintain the momentum. The Indian economy had grown by 7.3 per cent in 2015-16, Moody's said adding private investment remains weak.
"India, as a net importer of commodities, has benefited from falling prices and growth will be driven by rising consumption. However, a sustained improvement in domestic private investment would be required for the growth momentum to be sustained," Moody's said in its Global Macro Outlook 2016-17