New Delhi. Rating agency S&P has once again upgraded the rating of Indian economy growth . This time the rating firm has changed it from stable to positive. According to S&P, India’s strong economy growth has had a positive response on credit metrics.
Let us tell you that BBB rating is considered to be the lowest level.
India’s fiscal deficit has widened, but efforts are on to reduce it. We expect India’s fundamentals to support growth momentum in 2-3 years.
The rating agency said that if the fiscal deficit is reduced then it can upgrade India’s rating. The Government of India expects the fiscal deficit to come down to 5.1 percent of GDP in the financial year 2025 , which was 5.8 percent in the financial year 2024. At the same time, the government’s target is to bring the deficit to 4.5 percent by the financial year 2025-26.
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Rating may increase in these cases
S&P said it could upgrade India’s sovereign rating in the next two years if India pursues cautious fiscal and monetary policies that reduce the government’s high debt and interest burden while enhancing economic flexibility. S&P revised the outlook on India to positive from stable.
S&P is a US based agency. According to S&P, if India’s fiscal deficit reduces significantly, that is, if the GDP falls below 7 percent, then it can increase the rating.
S&P may still upgrade the rating if there are sustained and substantial improvements in monetary policy by the RBI.
The world’s three major global rating agencies – S&P, Fitch and Moody’s – have given India the lowest investment grade rating. However, Fitch and Moody’s outlook on their ratings is still stable. Ratings are seen by investors as a barometer of a country’s creditworthiness and have an impact on the cost of borrowing.
