Moody's Investors Service believes that the continued reforms to enhance business environment and moderate inflation will help India achieve robust growth.
Moody's in its Annual Credit Analysis said, "Evidence of success in policymakers' efforts to introduce growth-enhancing economic and institutional reforms would provide support for a rating upgrade, as it forecast GDP growth at around 7.5 percent for next two years."
India's credit profile is supported by strong growth potential and high private savings rate, it said.
"However, signs of slippage in progress towards those goals or indications of rising contingent liability risks related to the banking sector could weigh on India's credit quality," added Moody's.
Moody's further said institutional strength is apparent in robust democratic
apparatus. Offsetting weaknesses include an uncertain regulatory environment, corruption, with a slow-moving judicial system and, in general, inefficiencies in the delivery of government services.
External developments have been favorable to India such as lower global oil prices have combined with policy measures to move the economy towards a more stable macroeconomic development with smaller fiscal deficits, lower inflation and a narrower current account deficit.
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