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Business News/ News / India/  S&P affirms India's sovereign rating at ‘BBB’, with stable outlook, expects 6% GDP growth

S&P Global Ratings affirmed India's sovereign rating at 'BBB-' with a stable outlook and said that 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 economy and healthy revenue growth will support its weak fiscal settings.

S&P expects India's economy to grow by about 6 per cent in 2023/24, with investments and consumer momentum helping growth prospects over the next few years.

"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.

Also Read: Fitch affirms India’s sovereign rating on robust growth outlook

'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 stable rating outlook reflects our expectation that India's sound economic fundamentals will be sufficient to offset the government's weak fiscal performance, helping to sustain elevated government funding needs and a high interest burden over the next 24 months," analysts wrote in a release.

The government will likely maintain elevated fiscal deficits and a large debt stock despite ongoing consolidation efforts, it added. 

The rating agency said despite strong revenue gains, fiscal consolidation in India has trailed regional peers at a similar rating level. S&P said it forecasts overall net general government debt stabilising just below 85 per cent of the GDP over the next three years, which would be higher than the pre-pandemic level of 75 per cent of GDP, but well below the pandemic peak of over 90 per cent.

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.

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Updated: 18 May 2023, 06:57 PM IST
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