S&P Affirms India's Sovereign Rating, Outlook Stable

The stable outlook on the long-term rating reflects S&P's view that India's strong economy and healthy revenue growth will support its weak fiscal settings

India's economy is performing well amid challenging global conditions. We anticipate sound fundamentals to underpin growth over the next two to three years, said S&P.

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S&P Global Ratings on Thursday affirmed India's sovereign rating at 'BBB-' with a stable outlook and said sound economic fundamentals will underpin growth over the next 2-3 years. The stable outlook on the long-term rating reflects S&P's view that India's strong economy and healthy revenue growth will support its weak fiscal settings.

"S&P Global Ratings affirmed its 'BBB-' long-term and 'A-3' short-term unsolicited foreign and local currency sovereign credit ratings on India. The outlook on the long-term rating is stable," the US-based agency said in a statement.

'BBB-' is the lowest investment grade rating. "India's economy is performing well amid challenging global conditions. We anticipate sound fundamentals to underpin growth over the next two to three years," S&P said.

The government will likely maintain elevated fiscal deficits and a large debt stock despite ongoing consolidation efforts, it added.  Earlier this month, another global rating agency Fitch had affirmed India's sovereign rating at 'BBB-' with a stable outlook, citing robust growth and resilient external finances. 

Meanwhile, Fitch on Tuesday affirmed India's sovereign rating at 'BBB-' with a stable outlook, on robust growth and resilient external finances, but said weak public finances remain a challenge.

India's rating has been unchanged at 'BBB-', which is the lowest investment grade, since August 2006.

"Fitch Ratings has affirmed India's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB-' with a Stable Outlook," it said in a statement, adding strong growth potential is a key supporting factor for the sovereign rating.

It forecasts India to be one of the fastest-growing sovereigns globally clocking 6 per cent growth in the current fiscal (April 2023-March 2024) supported by resilient investment prospects. The agency estimates growth in the 2022-23 fiscal at 7 per cent and 6.7 per cent in 2024-25.