Mumbai: A Moody`s Investors Service analyst said India needed to improve its fiscal position to earn a ratings upgrade and warned that even if policy action was taken now it would likely take a while for the impact to be reflected on government finances.
India`s fiscal consolidation would also need to be an improvement on similarly-rated countries, Moody`s sovereign rating analyst Atsi Sheth told Reuters on Thursday.
"For a rating upgrade, the fiscal position has to improve materially or there should be evidence that it`s going to improve materially not only with respect to itself, but comparable to similarly-rated countries," she told Reuters in a phone interview.
"And that is still some distance away even if policy action is taken now because there is a long road to climb back up."
Sheth added the government`s moves to improve the fiscal position would have a bigger impact on India`s credit than any policy action by the central bank.
The Reserve Bank of India on Thursday unexpectedly cut its policy repo rate by 25 basis points to 7.75 percent.
Moody`s currently rates India at "Baa3", the lowest investment-grade rating, with a "stable" outlook.
