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S&P Global Ratings has affirmed India’s sovereign rating at ‘BBB-’ with a stable outlook and said that strengths lie in a fast-growing economy and strong external balance sheet but flagged weak fiscal performance and low GDP per capita. It said the Indian economy is set for real GDP growth of about 6 per cent in 2023, which compares favourably with emerging market peers amid a broad global slowdown. Investment and consumer momentum will underpin solid growth prospects over the next 3-4 years.

The Ratings agency has affirmed its ‘BBB-’ long-term and ‘A-3’ short-term unsolicited foreign and local currency sovereign credit ratings on India. The outlook on the long-term rating is stable. ‘BBB-’ is the lowest investment grade rating. The stable outlook on the long-term rating reflects S&P’s view that India’s strong economy and healthy revenue growth will support its weak fiscal settings.

S&P said it anticipates solid consumer and investment dynamics will propel real GDP growth to 6 per cent in fiscal 2024 and 6.9 per cent in fiscal years 2025 and 2026.Surging capital expenditure (capex) by the central government and, to some extent, by state governments will help to revive investment and spur construction activity. Based on budget plans for fiscal 2024 and its expectation of strong revenue growth, it believes this support will continue during the current fiscal year.