'After an 18-year gap': Finance ministry says S&P upgrade shows economy’s agility, strength

For the first time in 18 years, India’s sovereign credit rating has been upgraded by S&P Global Ratings, a move the Finance Ministry hailed as proof of the economy’s resilience and policy stability under Prime Minister Narendra Modi’s leadership.

S&P Global on Thursday raised India’s long-term unsolicited sovereign credit rating to ‘BBB’ from ‘BBB-’, and its short-term rating to ‘A-2’ from ‘A-3’, with a stable outlook. The transfer and convertibility assessment was also revised upward to ‘A-’ from ‘BBB+’. The last upgrade came in January 2007.

“The ratings upgrade reaffirms that under Prime Minister Narendra Modi’s leadership, India’s economy is truly agile, active, and resilient,” the Finance Ministry said in a statement on X. It credited the move to “prioritising fiscal consolidation while maintaining a strong infrastructure creation drive and inclusive growth approach.”

S&P said the upgrade reflected “robust economic expansion, sustained fiscal consolidation, and policy stability.” It noted that GDP growth averaged 8.8% between FY2022 and FY2024, and is expected to remain at 6.8% annually over the next three years. “Sound economic fundamentals will underpin growth momentum over the next two to three years,” the agency added, praising monetary policy settings that are “increasingly conducive to managing inflationary expectations.”

The ratings agency also called India one of the best-performing economies globally, pointing out that 60% of growth comes from domestic consumption, making the country relatively insulated from global shocks — including the latest U.S. tariffs.

Risks remain. S&P warned the rating could be lowered if political commitment to fiscal discipline falters or if structural growth slows significantly. Conversely, a further upgrade is possible if fiscal deficits narrow and public debt stabilizes below 6% of GDP.

Despite U.S. President Donald Trump’s decision to impose a 25% tariff on Indian imports in response to oil purchases from Russia, S&P expects only a “modest” fiscal impact and no derailment of long-term growth.

The government framed the development as a milestone toward its 2047 “Viksit Bharat” goal, saying the upgrade affirms investor confidence and India’s trajectory as a resilient, high-growth economy.