Ahead of Budget, rating agency Moody's today said India's sovereign rating upgrade would depend upon the government's determination to push economic reforms and reduce fiscal deficit.
"The extent to which accelerating growth will buttress the sovereign credit profile amid international uncertainty will depend on fiscal and structural reform policies," it said in a report titled 'GDP Revisions Underscore Economic Strength, But Are Credit Neutral'.
Finance Minister Arun Jaitley, in his first full-fledged Budget on February 28, is likely to lay down the roadmap for economic reforms and fiscal consolidation with a view to boost growth.
Earlier this week, another rating agency Standard & Poor's had said India must deliver on reform promises and boost growth as a weak fiscal position is constraining its sovereign rating.
Moody's added that declining inflation also calls for a policy rate cut to boost investments.
In 2015, benign global oil prices are likely to keep India's inflation and current account pressures in check, the report said, adding "this could allow for more accommodative monetary policy which, in turn, would revive investment growth".
The US-based rating firm said the upward revision in GDP growth estimates on the basis of a new base year highlights the strength of the economy, but does not impact Moody's overall assessment of the sovereign's credit profile.
All the three big international rating agencies such as S&P, Moody's and Fitch have 'BBB' ratings on the country's sovereign with a stable outlook.
The current rating is closest to junk status or below investment grade.
As per the new base year of 2011-12, Indian economy grew at 6.9 per cent in 2013-14, up from sub-5 per cent estimated when the base year was 2004-05.
