New Delhi: With the government committed to fiscal consolidation, India might not have to wait for 13 long years for next sovereign upgrade by a rating agency, a SBI research report said on Friday.

The US-based Moody’s upgraded India’s sovereign credit rating by a notch to ‘Baa2’ with a stable outlook on Friday. The upgrade comes after a gap of 13 years. Finance minister Arun Jaitley has termed the upgrade as a “belated recognition" of reforms in the last few years, and vowed to continue them while maintaining fiscal discipline.

“We believe that India would need not wait for 13 long years for the next upgrade as the government is firm and committed to adhere with the fiscal consolidation path," said the country’s largest lender in its ‘Ecowrap’. It further said the government’s recent Rs2.11 lakh crore recapitalisation plan will help improve health of state-owned banks, which are grappling with high non- performing and re-structured assets.

“Further, recent reform measures (like GST, RERA, Bankruptcy and Insolvency code) will improve overall economic and investment sentiment in the country," it said. Also, inflation is stable and within target, while current account deficit is at sustainable level.

On fiscal front, the report said the markets would now definitely factor in a higher fiscal deficit in 2017-18. “In our view, this would be perfectly justified given the centre’s short-term revenue losses due to GST," it said.

Referring to the pending Open Market Operations (OMO) sales on 23 November by RBI, the report said cumulative sales for the year would touch Rs1 lakh crore. “We think that the central bank should stop further OMO sales for now," it said. The Reserve Bank of India has been sucking out liquidity since July through OMO.