S&P Global has revised the rating to ‘BBB’ from ‘BBB-’ as policy continuity and strong infrastructure spending supports the country’s long-term growth prospects
India’s long-term sovereign credit rating has been upgraded by S&P Global to ‘BBB’ from ‘BBB-’, citing strong economic resilience and sustained fiscal consolidation.
The credit rating agency said the stable outlook reflects expectations that policy continuity and robust infrastructure spending will bolster the country’s long-term growth. These factors, S&P added, are likely to sustain India’s growth momentum over the next two to three years.
However, it cautioned that they may lower the ratings if there is any erosion of political commitment to consolidate public finances. In addition, downward pressure could also come from India’s economic growth slowing materially on a structural basis, such that it undermines fiscal sustainability.
The upgrade comes a couple of weeks after US President Donald Trump called India a ‘dead economy’ while pressuring the country to stop buying crude from Russia. As of now, India faces potential 50% tariffs, effective August 27.
S&P Global believes that the impact of tariffs on India will be manageable, as it is less reliant on trade and about 60% of its economic growth stems from domestic consumption.
In a scenario where India has to switch from importing Russian crude oil, the fiscal cost, if entirely borne by the government, will be modest given the narrow price differential between Russian crude and current international benchmarks.
Inflation Support
Earlier in the day, government data showed wholesale inflation had eased to a two-year low of -0.58% in July, due to a fall in mineral oils, crude petroleum & natural gas, and the prices of basic metals. This comes after India’s annual retail inflation slowed to 1.55% in July from 2.1% in June, the lowest in eight years, led by a steep drop in food prices.
RBI’s Inflation Outlook
The Reserve Bank of India (RBI) had maintained the repo rate at 5.5% in its August Monetary Policy Committee (MPC) meeting. The RBI lowered its FY26 inflation projection to 3.1%, with CPI inflation at 2.1% in June 2025.
According to S&P Global, RBi’s monetary policy reform to switch to inflation targeting has reaped dividends. It noted that in recent months, inflation has stayed at the lower bound of the Indian central bank’s target range of 2%-6%.
Markets Watch
The Nifty50 index remained rangebound at 24,645.20. Auto, IT, pharma, and financial indices gains were offset by losses in metal, realty, and FMCG stocks.
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