ICRA has rating requests from two more states but Chaudhary declined to give the names. Till now, the investment climate of a state and its financial health were known through "shadow ratings" given by rating agencies for various state government undertakings, who raise funds from the public through debt programmes.

Currently state government undertakings like electricity boards and developmental projects were being guaranteed by the state government and the rating agencies gave them the guarantees' rating, he said. Sardar Sarovar project in Gujarat and Krishna Bhagya Jala Nigam in Karnataka were beingguaranteed by the respective state governments for raising funds from the public at a cheaper cost.

Sources at Crisil, another leading agency, said it had been asked by Andhra Pradesh government for a credit rating. However, the sources declined to give the progress on the rating assignment.

Chaudhary said ICRA had rated electricity boards of Punjab, Rajasthan, Maharashtra, Karnataka and Tamil Nadu through the credit enhancement route. As per the credit enhancement route, the rating agencies assign a higher rating on the support of the respective state governments' financial health.

"Many electricity boards are in a bad shape and they are not in a position to mobilise resources for restructuring exercises," Chaudhary said, adding, "with the guarantee provided by state governments, prospective investors would be prepared to fund the projects even at a cheaper rate of interest".