S&P upgrades India’s rating after over 18 years to ‘BBB’

New Delhi: S&P Global Ratings on Thursday upgraded India’s sovereign credit rating to ‘BBB’ from ‘BBB-’, with a stable outlook, marking the country’s first such upgrade in over 18 years. The agency cited strong economic growth, fiscal consolidation efforts, and a supportive monetary policy environment as key drivers.

“India remains among the best-performing economies in the world… The quality of government spending has improved in the past five to six years,” S&P said in its statement. It added that the economy’s reliance on domestic consumption — accounting for about 60 per cent of growth — shields it from potential trade shocks. The agency assessed that even a 50 per cent US tariff on exports would have a “manageable” impact.

The Finance Ministry welcomed the decision, stating it affirms that under Prime Minister Narendra Modi’s leadership, “India’s economy is truly agile, active, and resilient.” It credited fiscal discipline alongside sustained infrastructure investment and inclusive growth initiatives for the rating improvement.

S&P forecast India’s real GDP growth at 6.5 per cent in fiscal 2026, averaging 6.8 per cent over the next three years, supported by strong consumer demand and public investment. The agency expects the government deficit to narrow from 7.3 per cent of GDP in fiscal 2026 to 6.6 per cent by fiscal 2029.

The upgrade is expected to lower overseas borrowing costs for Indian companies. It follows a similar move earlier this year by Morningstar DBRS, which also raised India’s ratings to ‘BBB’.

S&P’s stable outlook reflects expectations of sustained policy stability, high infrastructure spending, and cautious fiscal and monetary measures to manage debt. “With economic recovery now well on track, the government can depict a more concrete (albeit gradual) path to fiscal consolidation,” the agency noted.

with agency inputs