The global credit rating agency S&P Global has raised India’s long-term unsolicited sovereign credit rating to BBB from BBB- citing the country’s economic resilience and sustained fiscal consolidation.
The upgrade follows the agency’s move in May last year to revise India’s outlook to positive from stable, driven by robust growth and improved quality of government spending.
“The upgrade reflects buoyant economic growth, underpinned by an enhanced monetary policy framework that anchors inflation expectations,” S&P said in a statement. “Coupled with the government’s commitment to fiscal consolidation and efforts to improve spending quality, these factors have strengthened credit metrics.”
(The New York-based S&P Global provides governments, businesses, and individuals with market data and financial intelligence solutions across global capital, commodity, and automotive markets.)
Following the announcement, the rupee firmed to 87.58 against the dollar from 87.66, while the benchmark 10-year bond yield dropped 7 basis points to 6.38%. S&P also lifted its transfer and convertibility assessment to A- from BBB+.
The agency cautioned that ratings could face downward pressure if political commitment to fiscal consolidation weakens, or if structural economic growth slows materially enough to undermine fiscal sustainability. Conversely, ratings could be raised further if fiscal deficits narrow significantly, bringing the net change in general government debt below 6% of GDP on a sustained basis.