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Moody's may upgrade India outlook

Janaki Ghatpande

Global rating agency Moody's Investors Service is considering a possible upgrade of its India outlook. "India has a stable rating and is on review watch for an upgrade. Moody's is not looking to downgrade India," John Rutherford Jr, president and chief executive officer, Moody's Corporation, told Business Standard yesterday.

Rutherford, however, said that the possible upgrade is unlikely to take place soon. Moody's had downgraded India's outlook from positive to stable in 1998 after the country declared itself a nuclear power. The current rating is Ba2 with a stable outlook.

Analysts view this as a positive development since early this month, Moody's had talked about a "slippage" in the government's reform effort.

Standard & Poor's, another rating agency, had said it was still worried about the size of the budget deficit. Fitch lowered its ratings outlook on India's sovereign debt to negative from stable, citing worries about fiscal policy, privatisation and deterioration in the country's foreign investment climate.

The recent controversy surrounding the $3-billion Dabhol Power Company has also been driving potential investors away, feel the agencies.

"India Inc needs to build a positive impression in order to attract more foreign direct investments. The DPC imbroglio has been acting as a deterrent, causing implicit harm to the investment climate in India," said an analyst with an investment bank.

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