Bond ratings play a significant role in the Indian government’s ability to finance its 2023 budget. Bond rating agencies such as Moody’s, S&P, and Fitch provide independent assessments of the creditworthiness of governments and their ability to repay debt obligations. These ratings affect the interest rates that a government must pay when issuing bonds in the market.

In India, higher bond ratings translate into lower borrowing costs for the government. This is because investors are willing to accept lower yields on bonds issued by highly rated governments since they perceive them as having a lower risk of default. On the other hand, if bond ratings are downgraded, it can lead to an increase in borrowing costs for the government as investors demand higher returns due to perceived risks.

A downgrade in India’s sovereign credit rating occurred in April 2020 by Moody’s from Baa2 with negative outlook to Baa3 with stable outlook due to COVID-19 pandemic impact on economy; this could potentially raise funding cost for country’s ambitious infrastructure development projects leading up towards FY23 budget

The Indian government has set ambitious targets under its 2023 Budget plan which includes an increased allocation towards infrastructure development across sectors like railways and highways. The success of these initiatives relies heavily on accessing affordable financing through both domestic and international sources.

Therefore maintaining or improving existing bond rating levels is key priority for Government of India so that it can continue attracting capital inflows and support growth ambitions stated under recently announced National Infrastructure Pipeline (NIP) – $1.4tn investment plan over next five years ending FY25