Moody’s may upgrade India’s credit rating

MUMBAI, MAR 3: Global rating firm Moody's Investors Service (MIS) of the US is likely to upgrade the sovereign credit rating of India from...

MUMBAI, MAR 3: Global rating firm Moody’s Investors Service (MIS) of the US is likely to upgrade the sovereign credit rating of India from stable within the next 12 to 18 months. The postive outlook has been influenced by the realistic and objective budget, John Rutherford, president of the international credit rating agency, said on Friday.

Moody’s had undertaken review of India’s sovereign rating in October last. And according to Rutherford there was a 50 per cent chance the rating would be upgraded. He said China’s sovereign rating, a notch higher than India’s, was based on higher foreign currency reserves.

Rutherfurd said the positive outlook had not been affected by Finance Minister Yashwant Sinha’s 2000/2001 budget proposals, announced earlier in the week. But Moody’s perceived enough good signals in the budget to retain the positive outlook.

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Rutherfurd also saw an "increased willingness to acceptforeign capital and technology" evident in the budget. But Rutherfurd and other Moody’s officials stressed there was an awareness of the internal political constraints and external factors that entered the rating equation.

Sinha’s budget proposal to reduce fertiliser subsidies has already run into opposition. "We are not expecting reform at that kind of a wholesale level to occur within the next 12 months in order for us to review the rating," said Raymond McDaniel, Managing Director of Moody’s International Finance Department.

"You can just have a very gradual process that results in an upgrade," said Rutherford. Asked what India should do to be rewarded with a positive review in 2001, Rutherford answered India may be slow in policy implementation but it should not retreat from reforms. "It is more the absence of a failure," Rutherford said. "There’s a lot of promise and less actual results than one would hope but I think that’s taken into account in the thinking about India."

Moody’s keen on higher ICRA stake

MUMBAI: Moody’s Investors Service would like to increase its stake in Indian credit rating agency ICRA Ltd, Moody’s President John Rutherfurd Jr said on Friday. "I think it is something we would like to do, but the opportunity has to be available. That’s one of the things that may be under discussion with ICRA," Rutherfurd said.

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Moody’s currently own 11.3 per cent in ICRA. "But we have no commitments on either side at the moment to do that," he added. Moody’s and ICRA will also hold talks to explore initiatives in other activities, including outsourcing. "We would like to have ICRA as a partner on outsourcing, but if they are not interested in performing certain kinds of activities, we could look at other organisations," he added.