Internationally influential think-tank, Organisation for Economic Co-operation and Development (OECD) on Tuesday threw its weight behind India saying the country is worthy of a credit rating upgrade, but cautioned Indian policy makers against taking measures only with an aim to get a better rating.

The OECD also said the Indian government needs to do “much more”, in terms of promoting India through road shows. The government needs to be a “good salesman” -- by informing global investors and rating agencies about the reforms it has already undertaken (and will do so in the future) "in the best interest of the country” as well as their positive impact on the economy, according to Angel Gurría, the Secretary-General of the OECD.

India’s (sovereign) credit rating has remained unchanged for the past several years at ‘BBB (-)’ – or the lowest investment grade, which is only a grade above “junk” status for government/sovereign bonds. Leading international credit rating firms such as Standard & Poor's, Moody's and Fitch rate government/sovereign bonds on the basis of lending risks – or in other words, their estimation of the borrower’s ability to repay its debt and the likelihood of them defaulting. According to the Indian government’s Economic Survey 2016-17, “India’s ratings have remained stuck at the much lower level of BBB-, despite the country’s dramatic improvement in growth and macro-economic stability since 2014.”

Mr. Gurría told The Hindu on the sidelines of a Confederation of Indian Industry-event that though India deserves a higher rating, "You don’t take policy measures to satisfy the rating agencies... to get a better rating.” He added, “You take policy measures because they are in the best interest of the country... and the consequence may be that the rating agencies will recognise them.” The rating agencies have become “ultra-cautious” after the debt of the firms they granted the highest (AAA) ratings, went wrong – leading to the 2007-08 American subprime mortgage crisis and then the 2008-09 Great Recession.

Mr. Gurría said: “The rating agencies are very cautious now, perhaps ultra-cautious. Therefore, today you need to do much more to convince them that you deserve a better rating." However, he added, “You (Indian government) have got to be a good salesman… go and do road shows. You’ve got to tell everybody you are going to do a bond issue, and that is good opportunity to tell everybody, the rating agencies and the investors, what you are doing.” Mr. Gurría said: “The reforms that the Indian government led by Prime Minister Narendra are undertaking relatively recent. They may need a little bit more time so that people can evaluate the results.” (ENDS)