S&P Global upgrades India’s rating on strong growth, fiscal discipline
Mumbai: India’s credit profile received a boost as S&P Global upgraded its ratings, citing the country’s buoyant economic growth, fiscal consolidation push, and improved spending quality.
The agency forecast that India’s economy will expand by 6.8% annually over the next three years, CNBC TV18 reported.
S&P raised India’s short-term rating to A-2 from A-3 and upgraded the transfer and convertibility assessment to A- from BBB+. The outlook remains stable.
The upgrade comes just a day before India celebrates its 79th Independence Day.
According to S&P, the stable outlook reflects expectations that sustained policy stability and robust infrastructure investment will continue to support India’s long-term growth trajectory.
“That, along with cautious fiscal and monetary policy that moderates the government's elevated debt and interest burden, will underpin the rating over the next 24 months,” the note said.
In May 2024, S&P revised its outlook on India from stable to positive, signalling a potential rating increase if the fiscal deficit narrowed enough to bring the net change in general government debt below 7% of GDP on a structural basis. The latest upgrade underscores India’s commitment to fiscal consolidation while maintaining an aggressive infrastructure push.
The agency added that India’s solid economic expansion is improving its credit metrics and that strong fundamentals should sustain the growth momentum over the next two to three years. “In addition, monetary policy settings have become increasingly conducive to managing inflationary expectations,” S&P noted.
Looking ahead, S&P said a further rating upgrade could be on the cards if the fiscal deficit narrows sufficiently to push the net change in general government debt below 6% of GDP on a structural basis.
“India just upgraded by S&P to BBB with Stable Outlook. Government Bond market rallying on this news as this would encourage more foreign and FPI inflows into the bond markets. A higher Credit Rating systematically gets more investments into the country as risk-adjusted returns are better. We see India to remain in global spotlight for Emerging Market favourable asset allocation and bond yields to fall in the short term,” Vishal Goenka, Co-Founder, IndiaBonds.com, told IBNS.
Support Our Journalism
We cannot do without you.. your contribution supports unbiased journalism
IBNS is not driven by any ism- not wokeism, not racism, not skewed secularism, not hyper right-wing or left liberal ideals, nor by any hardline religious beliefs or hyper nationalism. We want to serve you good old objective news, as they are. We do not judge or preach. We let people decide for themselves. We only try to present factual and well-sourced news.
Support objective journalism for a small contribution.
