- India's long-term sovereign credit rating raised to BBB from BBB- by S&P Global
- S&P cited economic resilience, fiscal consolidation, and infrastructure investment
- Short-term rating upgraded to A-2 from A-3 with a stable long-term outlook
Amid US President Donald Trump's steep tariffs on trade with New Delhi, S&P Global, the rating agency, has raised India's long-term unsolicited sovereign credit ratings to "BBB" from "BBB-" on Thursday, citing economic resilience and sustained fiscal consolidation. The upgraded rating reflects India's continued policy stability and high infrastructure investment, which are set to boost the country's long-term growth, the agency said.
S&P is the first global rating agency to upgrade India's sovereign rating from the lowest investment grade of 'BBB-'.
"The upgrade of India reflects its buoyant economic growth, against the backdrop of an enhanced monetary policy environment that anchors inflationary expectations," the rating agency said in a statement.
It said India is prioritising fiscal consolidation, demonstrating the government's political commitment to deliver sustainable public finances, while maintaining its strong infrastructure drive.
"Together with the government's commitment to fiscal consolidation and efforts to improve spending quality, we believe these factors have coalesced to benefit credit metrics," it added.
S&P Global Ratings also raised its short-term ratings to 'A-2' from 'A-3'. The outlook on the long-term rating is stable, the US-based agency said in a statement.
Though the US is India's largest trading partner, S&P does not expect the 50 per cent tariffs (if imposed) to pose a material drag on growth.
"We believe the effect of US tariffs on the Indian economy will be manageable. India is relatively less reliant on trade, and about 60 per cent of its economic growth stems from domestic consumption," S&P said.
The agency said India remains among the best-performing economies in the world. "It staged a remarkable comeback from the pandemic with real GDP growth over fiscal 2022 (year-end March 31) to fiscal 2024 averaging 8.8 per cent, the highest in Asia-Pacific," it said
Ratings could be further raised if fiscal deficits narrow meaningfully, such that the net change in general government debt falls below 6 per cent of GDP on a structural basis, the agency said.
The rating agency also revised its transfer and convertibility assessment to 'A-' from 'BBB+', it said.
The agency said the ratings could be further raised if fiscal deficits narrow meaningfully, such that the net change in general government debt falls below 6 per cent of GDP on a structural basis, it added.
Government Welcomes S&P's Rating Upgrade
The Ministry of Finance in a post on X wrote, "The Government of India welcomes the decision by S&P Global Ratings to upgrade India'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 rating upgrade comes after an 18-year gap, as S&P last upgraded India's rating in January 2007 to 'BBB'. The Ministry also added in the post that India's economy is truly agile, active and resilient.
