Global rating agency Moody's has said it may raise India's ratings in the domestic market if Finance Minister Pranab Mukherjee provides a comprehensive roadmap to withdraw stimulus measures to narrow down fiscal deficit.
Currently, India's ratings in domestic and overseas markets are placed at speculative and investment grades respectively, which means that the Centre has more chances to default on its obligations in the domestic market.
Moody's Investors Service Senior Analyst Aninda Mitra said the ratings in the domestic market could be upgraded two notches on par with its gradings in overseas markets, subject to fiscal consolidation policies of the Centre.
"Sovereign ratings pressures are easing. We have a positive outlook on the Ba2 (speculative grade) local currency sovereign rating," he said.
"We think that a well articulated, meaningful and an implementable fiscal consolidation plan may result in an upward movement of the, referenced, local currency ratings towards India's Baa3 (investment grade) foreign currency sovereign rating," Mitra added.
India’s long-term local currency debt is placed at Ba2 by Moody’s, which is two notches below the investment grade.
The comments by Moody's analyst assume importance, since speculations are rife that Finance Minister Pranab Mukherjee may partially rollback stimulus in the Budget, to be presented in Parliament on Friday.