S&P Raises India's Rating After 18 Years

"It's an acknowledgment of India's credible fiscal and monetary policy frameworks and their role in promoting macro stability.

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The impact on flows purely from the rating upgrade may not be much, since the other two rating agencies still have India's sovereign rating one notch lower and with a stable outlook," she said.

Both Fitch Ratings and Moody's have maintained the lowest investment grade for India with a stable outlook.

S&P said India's credit metrics have benefited from the government's commitment to fiscal consolidation and efforts to improve spending quality. It forecasts real gross domestic product (GDP) growth of 6.5 per cent this financial year, backed by "solid consumer and public investment dynamics".

"We expect policy continuity post-elections (states), which would support further economic reforms and fiscal consolidation," it said.