A few days ago, US President Donald Trump had described India’s economy as a dead economy and now an American credit rating agency has increased its rating. American credit rating agency S&P has increased India’s long-term sovereign credit rating from BBB- category to BBB, while short-term credit rating has also been increased from A-3 to A-2.
According to the agency, India adopted better monetary policy to control inflation and this helped in achieving strong economic growth. The agency said the Stable Outlook reflects expectations of continued policy stability and higher infrastructure investment, which will underpin India’s long-term growth. S&P also said the impact of US tariffs on India will be manageable, and strong economic infrastructure will support the country’s growth momentum over the next two to three years.
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‘The strong economic expansion is having a constructive impact on India’s credit metrics, and we expect strong economic infrastructure to underpin growth momentum over the next two to three years. Moreover, monetary policies are becoming increasingly accommodative of managing inflation expectations.’
Government welcomed
The government has welcomed this rating. The government said that 18 years ago i.e. in January 2007, this rating was upgraded to BBB- and now after 18 years the rating has been upgraded, which shows that India’s economy is on the right track.
The Government of India welcomes the decision by S&P Global Ratings to upgrade India’s long-term sovereign credit rating to ‘BBB’ from ‘BBB-’ and its short-term rating to ‘A-2’ from ‘A-3’, with a Stable Outlook. S&P last upgraded India in January 2007 to ‘BBB-’, hence, this…
— Ministry of Finance (@FinMinIndia) August 14, 2025
Tariff will not affect India
The agency believes that the tariffs imposed by America on India will not have much impact. It said that since 60 percent of India’s economic growth depends on domestic consumption and not exports, the tariffs are not likely to have much impact. S&P said that America is India’s largest trade partner but even if America imposes 50 percent tariff, it will not make much difference to India’s economic growth.
What will be the benefit?
With the increase in rating, the confidence of the world’s investors in the Indian economy will increase and more and more investors will come to the country, which will give more momentum to the country’s economy. Secondly, it will become easier and cheaper for India to take loans. This will also prove helpful in accelerating the economic development of the country if needed.
what is agency
S&P Rating Agency, full form Standard & Poor’s, is a leading global credit rating agency. It assesses the financial health and ability to repay debts of companies, banks, and governments. It issues ratings that help investors understand how capable an institution or government is in repaying its debts.
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What is BBB rating?
A BBB rating is a long-term credit rating awarded by Standard & Poor’s (S&P) and other credit rating agencies that reflects the ability of a company, financial institution, or government to repay its debt. It falls in the lowest category of investment grade, which means it is still considered safe for investment, but it carries a moderate level of risk.
The BBB rating indicates that the borrower (such as a government or company) is currently able to meet its financial obligations, but that the risk may increase if economic conditions change.
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