Global rating agency Moody's has revised India's sovereign rating outlook to "positive" from "stable", thereby moving a step closer to a credit rating upgrade. With this, the chance of a rating upgrade in the next 12-18 months has brightened. If things continue to improve, the rating level might also go up.
Major credit rating agencies have the lowest investment grade rating on India. Standard & Poor's and Fitch both rates the country's outlook as "stable" so far. Structural advantages, relatively benign commodity prices and liquidity conditions globally will keep India's growth above its peers, says Moody's. Further, it feels thst the Narendra Modi government has fast-tracked some projects, removed policy uncertainty in mining and coal and let businesses acquire land for factories. It has also relaxed rules on foreign investments in sectors such as insurance, e-commerce and railways. However, risks to India's credit profile remain from agriculture, global risk aversion, complacency on reforms, a weak banking system and high corporate leverage.