S&P Global Ratings Upgrades India's Long-term Sovereign Credit Rating

Strategic Insights -

Contrary to US President Donald Trump's criticism of India's economy as "dead," S&P Global Ratings has upgraded India's long-term sovereign credit rating from 'BBB-' to 'BBB.' This is a significant milestone, marking the first upgrade in 18 years. The upgrade comes on the heels of India's robust economic growth, improved monetary policy credibility, and sustained fiscal consolidation. S&P has expressed optimism about India's economic prospects, citing its "buoyant economic growth against the backdrop of an enhanced monetary policy environment that anchors inflationary expectations."

Key Takeaways:

  • S&P Global Ratings has upgraded India's long-term sovereign credit rating from 'BBB-' to 'BBB.'
  • This upgrade is the first in 18 years and reflects India's strong economic growth, improved monetary policy credibility, and sustained fiscal consolidation.
  • S&P cited robust economic growth, improved external resilience, and sustained fiscal consolidation as reasons for the upgrade.
  • The rating agency raised its transfer and convertibility assessment to 'A-' from 'BBB+', reflecting improved external resilience.
  • S&P expects India's debt-to-GDP ratio to decline to 78% by fiscal year 2029, from 83% in fiscal year 2025.
  • India's real GDP growth averaged 8.8% between fiscal 2022 and 2024, the highest in Asia-Pacific.
  • The upgrade has come after US President Donald Trump criticized India's economy as "dead" along with Russia.
  • S&P has stated that if India shifts oil purchases from Russia and the cost is fully borne by the government, it will have a modest impact on government finances.

Statistics:

  • S&P Global Ratings has upgraded India's long-term sovereign credit rating from 'BBB-' to 'BBB.'
  • The upgrade is the first in 18 years.
  • India's real GDP growth averaged 8.8% between fiscal 2022 and 2024.
  • The rating agency expects India's debt-to-GDP ratio to decline to 78% by fiscal year 2029.
  • S&P has raised its transfer and convertibility assessment to 'A-' from 'BBB+'.

Sources:

  • S&P Global Ratings
  • "India Ratings upgrades outlook to positive from stable," S&P Global Ratings, 24 May 2024
  • "United States, India, and Russia: Start shaping your oil strategy," S&P Global, 20 June 2022