New Delhi, Aug 27: Global rating agency S&P Global Ratings has retained India’s sovereign credit rating at ‘BBB/A-2’ with a stable outlook, signalling continued confidence in the country’s economic strength despite near-term challenges.
S&P expects India’s economic growth to moderate to around 6.6 per cent in the current financial year, mainly due to higher energy prices and difficult agricultural conditions.
Despite the expected slowdown, the agency sees strong growth ahead. It projects India’s economy to expand by an average of around 7 per cent annually over the next three years, supported by steady consumer demand, public investment and continued economic activity.
The rating agency said India’s strong and diversified economy, healthy external position and stable institutions remain key strengths supporting its credit rating.
At the same time, high government debt, weak fiscal performance and low per capita income continue to pose challenges to the country’s rating profile.
S&P said the rural economy may face pressure from lower rainfall and rising input costs. Agriculture accounts for around 18 per cent of India’s economy and provides employment to nearly 43 per cent of the workforce.
However, the agency expects the expansion of sectors such as financial services, technology and manufacturing, along with continued infrastructure development, to help support overall economic growth.
Public investment is also expected to remain an important growth driver. Higher capital expenditure by the central and state governments could boost infrastructure development, construction and private-sector activity.
S&P also stressed the importance of continued fiscal consolidation. It said reducing the fiscal deficit while maintaining infrastructure investment could strengthen India’s credit profile over the longer term.
The agency noted that the government has increasingly shifted its focus towards capital expenditure in recent years. Although the pace of planned capital spending growth for fiscal 2027 is slower, S&P said this does not indicate a deterioration in the quality of government expenditure.
Overall, the stable outlook reflects expectations that India’s strong growth potential, economic diversification and continued public investment will help the country maintain momentum over the medium term.