S&P Upgrades India to BBB, Stable Outlook
New Delhi: India received a boost to its economic standing as Standard & Poor’s (S&P) Global Ratings upgraded the country’s long-term sovereign credit rating to ‘BBB’ from ‘BBB-’ and its short-term rating to ‘A-2’ from ‘A-3’, with a stable outlook, the Ministry of Finance announced. This marks India’s first sovereign rating upgrade by S&P in 18 years, since its elevation to investment grade in 2007, and follows a revision of the outlook to ‘Positive’ in May 2024.
The upgrade reflects India’s robust economic performance, which has positioned it as one of the fastest-growing major economies globally, with an average real Gross Domestic Product (GDP) growth of 8.8% from 2022 to 2024, the highest in the Asia-Pacific region. S&P highlighted several factors driving this achievement, including strong economic growth, the government’s consistent efforts to reduce fiscal deficits, and increased spending on infrastructure and capital expenditure (capex). The agency also noted India’s effective inflation management, with monetary policy reforms, such as the adoption of an inflation-targeting regime, helping to stabilise prices despite global challenges like price shocks.
India’s financial and external balance sheets were praised for their strength, supported by growing domestic capital markets and resilient corporate sectors. S&P emphasised that the country’s democratic institutions ensure policy continuity, fostering long-term economic stability. The report also pointed to India’s ability to maintain price stability amidst global headwinds, crediting monetary improvements and predictable policymaking for creating a supportive economic environment.
Looking forward, S&P projects India’s GDP growth at 6.5% for the fiscal year 2026, with sustained momentum expected over the next three years. The agency indicated that further reductions in the fiscal deficit, combined with continued public investment, could pave the way for additional positive rating actions. S&P also noted that India’s large domestic consumption base shields it from the impact of recently imposed United States (U.S.) tariffs, reinforcing the economy’s resilience.
This upgrade follows a similar move by Morning Star DBRS, which also raised India’s rating to ‘BBB’ recently. The Ministry of Finance welcomed S&P’s decision, viewing it as a strong endorsement of India’s economic policies and growth trajectory.
– global bihari bureau
