Investment-hungry India pleads with S&P for rating upgrade

The Indian government may cry foul and blame their methodology every time international rating agencies like Standard & Poor's, Fitch and Moody raise doubts about the country's growth prospects; nonetheless it is awake to the importance of such agencies in attracting much-desired foreign investment.

At a meeting with S&P representatives in New Delhi yesterday, Indian officials made a strong pitch for an upgrade of India's sovereign credit rating, citing steps taken to control fiscal deficit and revive investments even as GDP growth hit a 10-year low in 2012-13.

''I think there is a case for an upgrade because we have taken the kind of decisions that most countries in the world have not been able to take. This country has shown its determination to put the economy back on track. We believe it will happen and there is no doubt about it,'' economic affairs secretary Arvind Mayaram told reporters after the meeting.

Both S&P and its rival Fitch had cut their outlook on India to negative last year, warning the country of a possible rating downgrade to "junk" on the basis of worsening public finances, a slowing economy and persistent political gridlock in New Delhi.

Earlier this month, New Delhi made a similar pitch to Fitch.

Both Fitch and S&P rate India at BBB minus with a negative outlook, the lowest investment grade among the BRICS group of large emerging economies.

A cut to "junk" would force some foreign investors to pull their funds from the country, increasing the cost of credit for Indian firms in overseas money markets.

In January, S&P said the possibility of India losing its investment-grade credit rating had receded somewhat as a result of economic reforms undertaken by the government.

Mayaram said the government has taken bold and tough decisions such as reducing subsidies on petroleum products and attempts to rein in the fiscal deficit. ''We have spoken to them convincingly. We have shown that the reforms are on track,'' he said.