First Sovereign Rating Upgrade Since 2007
Just days after former US President Donald Trump labelled India’s economy “dead” in a criticism of trade policies and Russian crude imports, American credit rating agency S&P Global has delivered a starkly different verdict. On Thursday, S&P upgraded India’s long-term, unsolicited sovereign credit rating from BBB to BBB+, marking the country’s first sovereign upgrade since 2007 and moving it closer to the coveted A-level classification.
Strong Fundamentals Behind Upgrade
Trump’s comments had stirred outrage in India, but policymakers were quick to cite the nation’s consistent growth and status as the world’s fourth-largest economy. S&P’s report backed this view, crediting robust economic fundamentals, disciplined fiscal management, and massive infrastructure investments for the rating boost. “India’s growth story is intact,” the agency stated, projecting average annual GDP growth of 6.8% over the next three years after recording 8.8% between 2022 and 2024—the highest in the Asia-Pacific.
Resilience Against Global Headwinds
The agency downplayed the impact of Trump’s 50% tariff measures, noting India’s domestic consumption accounts for 60% of its economy, insulating it from external shocks. It also said any fiscal impact from shifting away from Russian crude would be minimal due to narrow price gaps with global benchmarks. Public investment in infrastructure, currently at 5.5% of GDP, alongside technology-driven reforms, was highlighted as a driver of employment and long-term growth.
Outlook and Risks Ahead
S&P’s stable outlook reflects confidence in the government’s ability to maintain fiscal prudence while expanding infrastructure. However, it warned that any weakening of fiscal discipline or a slowdown in structural growth could trigger a downgrade. Conversely, a sharp reduction in fiscal deficits—bringing net government debt below 6% of GDP—could lead to further upgrades.
Symbolic Boost Before Independence Day
Coming just before India’s 79th Independence Day, the upgrade carries symbolic weight, directly countering Trump’s “dead economy” remark. It underscores India’s resilience, signalling that its economic momentum remains strong despite global trade tensions and geopolitical challenges.