18yrs on India's S&P sovereign credit rating upgrade.
S&P Global Ratings has upgraded India's long-term sovereign credit rating to 'BBB'from'BBB-'with a stable outlook.
Good news is that This is the first upgrade from S&P in 18 years, according to Mint. The short-term rating has also been upgraded to'A-2'from'A-3'.
Key reasons for the upgrade include:
Economic Resilience: India's economy has demonstrated strong growth, averaging 8.8% from FY22 to FY24, the highest in the Asia-Pacific region.
Sustained Fiscal Consolidation: The government's commitment to fiscal consolidation, along with improved quality of public spending, particularly on infrastructure, has strengthened credit metrics.
Enhanced Monetary Policy Environment: The country's enhanced monetary policy environment has effectively anchored inflationary expectations, according to S&P Global.
Strong Corporate and Financial Sectors: India's corporate and financial sectors have stronger balance sheets than before the pandemic.
This upgrade is expected to attract more foreign investment and improve India's access to international capital markets.
Outlook
S&P expects India's GDP to grow by 6.8% annually over the next three years. The rating could be further raised if fiscal deficits narrow meaningfully, bringing the net change in general government debt below 6% of GDP on a structural basis. However, the ratings could be lowered if there is an erosion of political commitment to fiscal consolidation or if economic growth slows significantly.
Disclaimer
“I am the Co Founder and Fund Manager for ABHI Incubation Fund an Asset Management Company currently managing ABHI Incubation Angel Fund (SEBI registration IN/AIF/24-25/1514). I am "NISM - Series -XIX-D: Category I and II Alternative Investment Fund Manager" Certified.
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