'Agile, Active & Resilient': Govt Hails First S&P Upgrade In 18 Years For Indian Economy

The Government of India has welcomed the decision by S&P Global Ratings to upgrade the country’s long-term sovereign credit rating to ‘BBB’ from ‘BBB-’ and its short-term rating to ‘A-2’ from ‘A-3’, both with a stable outlook. This marks the first upgrade in 18 years, with the last one in January 2007.

In a post on X, the Finance Ministry said the ratings upgrade reaffirms that under Prime Minister Narendra Modi’s leadership, India’s economy is “truly agile, active, and resilient” while maintaining stability.

The ministry credited the improvement to fiscal consolidation, strong infrastructure creation, and an inclusive growth approach — efforts it says will continue as part of the country’s goal to achieve Viksit Bharat by 2047.

S&P’s decision comes just months after US President Donald Trump controversially referred to India as a “dead economy” during trade tensions. The upgrade now places India at ‘BBB’ investment grade, bolstering its standing among global investors.

The rating agency cited policy continuity, robust economic growth, and improved fiscal management as key reasons for the move. India’s real GDP growth averaged 8.8% between FY22 and FY24, the highest in the Asia-Pacific region, and is expected to grow at an average of 6.8% over the next three years.

S&P also noted India’s resilience, with domestic consumption driving around 60% of GDP, helping cushion against external shocks, including US tariffs.

Also Read: Govt Steps Up Engagement With Exporters As US Tariffs

On the fiscal front, S&P acknowledged a gradual consolidation path, projecting the general government deficit to narrow from 7.3% of GDP in FY26 to 6.6% by FY29. Capital expenditure has been a major driver, with the Centre’s capex budget set to hit Rs 11.2 trillion in FY26, or 3.1% of GDP, up from 2% a decade ago.

Monetary policy reforms, such as adopting inflation targeting, have helped keep consumer price inflation within the Reserve Bank of India’s 2%-6% range, averaging 5.5% over the past three years.

While S&P highlighted challenges like high public debt and relatively low per capita income, the upgrade underscores India’s improved economic fundamentals and policy framework. It is also the second sovereign rating revision this year, following DBRS’s move to lift India to BBB status.