2017.11.1704:45:00UTC+00Moody's Raises India's Sovereign Ratings

Moody's Investors Service raised the sovereign ratings of India by a notch, citing economic and institutional reforms.

The sovereign rating was lifted to Baa2 from Baa3. The rating outlook was changed to 'stable' from 'positive'.

The agency said the decision is supported by the expectation that continued progress on economic and institutional reforms will enhance India's high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term.

While India's high debt burden remains a constraint on the country's credit profile, Moody's said that the reforms put in place have reduced the risk of a sharp increase in debt.

Moody's said the government is mid-way through a wide-ranging program of economic and institutional reforms.

The agency said government efforts to reduce corruption, formalize economic activity and improve tax collection and administration, including through demonetization and Goods and Services Tax, both illustrate and should contribute to the further strengthening of India's institutions.

Moody's forecast economic growth of 6.7 percent for the fiscal year ending March 2018, before rising to 7.5 percent in FY2018. India's growth potential is significantly higher than most other Baa-rated sovereigns, Moody's said.