A Milestone and a Mandate

ON August 14, after an 18-year gap, India's sovereign credit rating was upgraded for the first time by S&P Global Ratings.

- TULSI JAYAKUMAR

The long-term sovereign credit rating was upgraded from BBB- to BBB, nudging the country a notch higher within the investment-grade bracket. The short-term ratings, and the transfer and convertibility assessment were also upgraded. On paper, this was a technical adjustment. In reality, it was a verdict on India's resilience, reforms and readiness for the next stage of growth.

Credit ratings are the world's shorthand for risk. They shape how much a country pays to borrow abroad, influence how global funds allocate their portfolios and signal to investors whether a nation is on the path of stability or vulnerability. In the years since 2007, the Indian economy endured the global financial crisis, the 'taper tantrum' in 2013, two currency crises in 2013 and 2018, a once-in-a-century pandemic and commodity shocks triggered by war. That India's rating has finally moved up suggests that, despite all the turbulence, something about the fundamentals has changed for the better.

S&P's assessment rests on a triad of strengths: growth, fiscal prudence and stability.

Between 2021-22 and 2023-24, India clocked an average real GDP growth of 8.8 percent—the fastest in Asia. Even with moderation, S&P expects annual growth to average 6.8 percent over the next three years. In an era when China is slowing and advanced economies are flirting with stagnation, India offers a rare momentum.