India's Sovereign Credit Upgrade: A Step Forward

India's recent upgrade in sovereign credit rating by S&P Global Ratings from 'BBB-' to 'BBB' has been hailed as a significant milestone. Sanjeev Sanyal, a member of the Economic Advisory Council to the Prime Minister (EAC-PM), described the move as 'much required', yet he believes India's true economic potential is still not fully recognized.

Behind the Upgrade: India's Economic Resilience

S&P's decision reflects India's robust fiscal consolidation, impressive growth momentum, and sustained infrastructure development. The agency highlighted India's real GDP growth averaging 8.8% in FY22–FY24, the fastest in Asia-Pacific, with projections of 6.8% annually over the next three years.

Future Prospects: More Upgrades on the Horizon?

Sanyal anticipates similar upgrades from other major rating agencies in the near future, citing India's strong economic performance. Despite the upgrade, he notes that India remains 'underrated by one notch', suggesting room for further recognition.

India's Economic Strengths

S&P praised India's domestic consumption-driven economy, which accounts for about 60% of GDP, for its resilience against global shocks. Additionally, the agency pointed to rising capital expenditure, with Union capex expected to reach Rs 11.2 trillion in FY26, or 3.1% of GDP, up from 2% a decade ago.