S&P Global Ratings has reaffirmed India’s sovereign credit rating at BBB with a stable outlook, citing ongoing economic resilience and policy continuity, while highlighting fiscal pressures and the importance of infrastructure investment.
S&P Global Ratings has kept India’s sovereign credit rating at “BBB” with a stable outlook, saying the economy remains among the strongest in major emerging markets thanks to policy continuity, heavy public investment and resilient domestic demand. The agency said India’s institutions and external balance sheet continue to support predictability, even as the country faces familiar pressure points in its public finances and debt burden.
The decision follows last year’s upgrade, when S&P lifted India’s long-term rating for the first time in 18 years, from “BBB-” to “BBB”. In its latest assessment, the agency said the Bharatiya Janata Party’s sizeable majority in the Lok Sabha gives the government room to pursue reform, despite the need to operate with coalition partners at the centre. It expects public investment and consumer spending to remain the main engines of growth over the next two to three years.
S&P also flagged near-term headwinds. Higher energy costs and difficult farm conditions are expected to slow growth modestly this year, with the agency projecting gross domestic product expansion of 6.6% in the current fiscal year. Even so, it said India’s underlying growth momentum remains solid, with annual growth averaging about 7% over the next three years. LiveMint separately reported that strong consumer demand and public investment continue to underpin that view.
At the same time, the ratings firm warned that India still faces a weak fiscal position, a heavy debt load and low GDP per person, with the Centre’s deficit target vulnerable to revenue shortfalls and subsidy pressures. According to Business Standard, S&P said keeping large infrastructure spending on track without materially widening the current account deficit will be crucial. The agency added that inflation should stay within the Reserve Bank of India’s target range, while higher private-sector participation in capital spending could help ease infrastructure gaps and lift long-term productivity.
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