S&P Upgrades India’s Sovereign Rating To ‘BBB’ With Stable Outlook; FinMin Reacts

Last Updated:August 14, 2025, 16:14 IST

A day ahead of India’s 79th Independence Day, the country’s short-term rating has also been revised to ‘A-2’ from ‘A-3’ by S&P Global.

S&P Global says the stable outlook reflects its view that “continued policy stability and high infrastructure investment will support India’s long-term growth prospects”.

Ratings agency S&P Global has upgraded India’s sovereign rating to ‘BBB’ from its earlier ‘BBB-‘ on Thursday, August 14, while maintaining the outlook as ‘stable’. The move comes a day ahead of India’s 79th Independence Day.

The short-term rating has also been revised to ‘A-2’ from ‘A-3’, and the transfer and convertibility assessment has been upgraded to ‘A-‘ from ‘BBB+’.

“India is prioritising fiscal consolidation, demonstrating the government’s political commitment to deliver sustainable public finances, while maintaining its strong infrastructure drive,” S&P said in a statement.

S&P Global said the stable outlook reflects its view that “continued policy stability and high infrastructure investment will support India’s long-term growth prospects. 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”.

In May 2024, the agency had shifted its outlook on the Indian economy to positive from stable, noting it could raise the sovereign rating if the fiscal deficit narrowed sufficiently for the net change in general government debt to fall below 7% of GDP on a structural basis.

‘Govt Of India Welcomes S&P’s Upgrade’

Reacting to this, the finance ministry in a statement said, “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. S&P last upgraded India in January 2007 to ‘BBB-’, hence, this rating upgrade comes after an 18-year gap.”

The ratings upgrade reaffirms that under Prime Minister Narendra Modi’s leadership, providing stability, India’s economy is truly agile, active, and resilient, it added.

“India has prioritised fiscal consolidation, while maintaining its strong infrastructure creation drive and inclusive growth approach, that has led to the upgrade. India will continue its buoyant growth momentum and undertake steps for further reforms to attain the goal of Viksit Bharat by 2047,” the ministry stated.

S&P’s is the second sovereign rating revision this year. DBRS had recently upgraded India to BBB status, it said.

According to S&P Global, India is prioritising fiscal consolidation, demonstrating “the government’s political commitment to deliver sustainable public finances, while maintaining its strong infrastructure drive”.

The agency also noted that the country’s robust economic expansion is improving credit metrics and that it expects sound fundamentals to sustain growth momentum over the next two to three years.

“In addition, monetary policy settings have become increasingly conducive to managing inflationary expectations,” the note stated.

S&P Global added it could consider another upgrade if fiscal deficits narrow to the extent that the net change in general government debt falls below 6% of GDP on a structural basis.

S&P Global’s ‘BBB’ rating is an investment-grade rating that indicates a country’s adequate capacity to meet its financial commitments, subject to adverse economic conditions.

“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.

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, it added.

‘Economy is dead?’

BJP national spokesperson Shehzad Jai Hind (Modi Ka Parivar) said in a post on X, “Economy is dead? BIG: S&P upgrades India’s sovereign rating to BBB (stable outlook). Global markets are acknowledging India’s growth momentum, fiscal consolidation, and infrastructure push. So much for the ‘dead economy’ chants from Rahul Gandhi.”

According to the post, S&P noted ‘India is prioritising fiscal consolidation… while maintaining its strong infrastructure drive’. Robust economic expansion is having a constructive effect… monetary policy settings have become increasingly conducive to managing inflationary expectations. We therefore raised our sovereign credit ratings on India to ‘BBB’ from ‘BBB-‘.

“Reforms deliver,” he added.

Mohammad Haris

Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h…Read More

Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h… Read More

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