Indian Economy marked stable by S&P Global Ratings
Not just another headline full of buzzwords, this is big news for India’s economy. India recently received a long-overdue promotion from S&P Global Ratings, which raised its long-term sovereign credit rating from “BBB-” to “BBB.”
Yes, this took a while, but that’s the first raise in last eighteen years. Since 2007, Indian economy was rated “BBB-“. Additionally, the short-term rating was raised to “A-2.”
How did this happened? a more intelligent, stable monetary policy, strong economic resilience, and prudent fiscal actions. In essence, India is acting like a mature, responsible economy on the international financial scene. what is the outlook? The Indian economy marked ‘Stable’
S&P lifts India’s rating to BBB in first upgrade since 2007 https://t.co/ln3muD3MJ5 https://t.co/ln3muD3MJ5
— Reuters World (@ReutersWorld) August 14, 2025
What Are The Key Factors That Pushed Indian Economy Towards Betterment?
While S&P Global Ratings has upgraded India’s long-term sovereign credit rating to ‘BBB’ from ‘BBB-’, marking its first upgrade in 18 years. Here are the key drivers behind the upgrade:
- Robust Economic Growth
- Out of all the economies, and even after so many hard days, India remains one of the best-performing economies globaly. which was also evident when Indian’s GDP climbed a rank from 5th position to 4th surpassing Japan in 2025.
- Indian economy has shown strong post-pandemic recovery, with real GDP growth averaging 8.8% (FY 2022–2024).
- Projected annual GDP growth of 6.8% over the next three years.
- Fiscal Consolidation
- With continued government focus on fiscal discipline and reducing the deficit India has improved on major fiscal scales in comparision to other countries.
- As a developing nation India has constanly increased infrastructure investment, which reflects a shift toward higher-quality expenditure.
- Indicates strong political commitment to maintaining sustainable public finances.
- Improved Monetary Policy Framework
- Indian goverenment in past few years has shifted its greater focus on inflation targeting, this has enhanced price stability.
- Consumer Price Index (CPI) inflation averaged 5.5% over the past three years, staying within the RBI’s target range.
- The policy framework is seen as more credible and better aligned with economic conditions.
Significance of the Upgrade By S&P Global
While Indian economy is performing well on global levels
- Lower Borrowing Costs
- The upgrade to a mid-level investment grade rating may lead to reduced overseas borrowing costs.
- Both Indian companies and the government could benefit from improved access to international credit.
- A higher credit rating indicates lower default risk, making India more attractive to global lenders.
- Boost to Investor Confidence
- The S&P upgrade, alongside a recent upgrade by DBRS, reflects strong confidence in India’s economic stability.
- It may attract increased foreign capital inflows and strengthen overall market sentiment.
- Reinforces India’s image as a reliable and growing investment destination.
Indian Government’s Response
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…
— Ministry of Finance (@FinMinIndia) August 14, 2025
The Ministry of Finance welcomed the upgrade as a recognition of India’s economic resilience. The ministry credited this achievement to the leadership of Prime Minister Narendra Modi for maintaining policy consistency and economic strength. It also reaffirmed its commitment to structural reforms aimed at achieving the “Viksit Bharat by 2047” vision.
