New Delhi, Aug 14 (NationPress) The Finance Ministry announced on Thursday that the recent upgrade of India's rating by Standard & Poor’s (S&P) Global Ratings serves as a vital endorsement of the nation's economic path and responsible fiscal policies.

This upgrade is notable as it is the first sovereign elevation by S&P in 18 years, the last being in 2007 when India was raised to investment grade at BBB-. In May 2024, the agency shifted its outlook on India from ‘Stable’ to ‘Positive’.

According to the S&P sovereign rating review released on Thursday, India's long-term sovereign credit rating was improved to ‘BBB’ from ‘BBB-’, and its short-term rating was raised to ‘A-2’ from ‘A-3’, accompanied by a Stable Outlook. The upgrade is attributed to several key factors, including India’s robust and vibrant economic growth, the government's ongoing commitment to fiscal consolidation, enhanced quality of public expenditure, especially in capital expenditure and infrastructure, as well as strong corporate, financial, and external balance sheets. Effective inflation management and increasing policy predictability have also been crucial, as noted by the rating agency.

S&P's report highlights the core strengths of the Indian economy, which have positioned India as one of the fastest-growing major economies globally, with real GDP growth averaging 8.8 percent from FY22 to FY24, the highest in the Asia-Pacific region. The implementation of monetary policy reforms, particularly the adoption of an inflation-targeting strategy, has effectively anchored inflation expectations, according to the agency.

Moreover, S&P acknowledged that despite facing global economic challenges and price fluctuations, India has showcased resilience by maintaining overall price stability. The improvements in monetary policy, along with the ongoing development of robust domestic capital markets, have fostered a more stable and supportive economic environment. The report also notes that India's external and financial positions remain strong, while democratic institutions continue to ensure policy continuity and long-term economic stability.

Looking forward, S&P anticipates GDP growth of 6.5 percent in FY26 and sustained momentum over the next three years. The agency indicated that a narrowing fiscal deficit and ongoing public investment could lead to additional positive rating actions. The report further observed that the effects of recently imposed U.S. tariffs are likely to be minimal, owing to India's substantial and resilient domestic consumption base.

Recently, another rating agency, Morning Star DBRS, also elevated India's rating to 'BBB' status.