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S&P Global Ratings has upgraded India’s long-term credit rating to ‘BBB’ from ‘BBB-’ and raised the short-term rating to ‘A-2’ from ‘A-3’, which is a notable boost to investor confidence.
The outlook on the long-term rating is still stable which is supported by expectations of policy continuity, strong economic growth, and better fiscal management.
Alongside the rating upgrade, S&P also revised its transfer and convertibility assessment for India to ‘A-‘ from ‘BBB+’, citing an improved monetary and external environment.
According to S&P, the stable outlook suggests confidence in India’s ability to sustain its growth trajectory, driven by high levels of infrastructure investment and a disciplined policy environment.
The rating agency noted that the government’s efforts in fiscal consolidation, along with targeted spending, are helping reduce the weight of elevated debt and interest burdens over time.
However, the agency warned that any backsliding on fiscal discipline or a material slowdown in structural economic growth could exert downward pressure on the ratings. Conversely, a further upgrade may be possible if India significantly narrows its fiscal deficit, bringing net general government debt additions below 6 per cent of GDP on a sustainable basis.
India’s economic momentum was central to the upgrade decision. Real GDP growth averaged 8.8 per cent between fiscal years 2022 and 2024 the highest in the Asia-Pacific region and S&P expects this strength to continue, projecting average growth of 6.8 per cent annually over the next three years.
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