Global credit rating agency Moody's kept India's rating at BAA3 and maintained a stable outlook for the economy, despite the Ministry of Finance's argument for an upgrade a few months ago.
In Moody's rating system, BAA3 is a relatively lower investment grade rating. This means that the credit risk is moderate to the issuer of the rated debt or financial instrument.
What is a BAA3 rating?
BAA3, which falls in the low-to-medium credit quality category, indicates that the issuer has an average default risk on its financial obligations. In June, Treasury officials met with Moody's executives and questioned the ratings parameters.
Global rating agencies look at various growth metrics for ratings, including economic growth, inflation, overall government debt, and short-term external debt as a percentage of GDP. Political stability is also taken into account.
Moody's ratings come days after S&P Global recently forecast that the Indian economy will see an average annual GDP growth of 6.7% through March 2031.
The rating agency also maintained a 6% growth rate for the country in the current financial year and noted that India would be the fastest-growing economy in the G20 at this rate.
