Good news for India before Independence Day, S&P upgrades credit rating after 19 years, know what will happen with this

S&P Global Upgrades India Rating: Improvement in credit will reduce the cost of debt for Indian companies in international markets. In January 2007, S&P gave India the lowest investment level rating, 'BBB-'.

S&P Upgrades India Ratings: India's sovereign credit rating was upgraded by S&P Global Ratings on Thursday to 'BBB'. The rating agency has raised India's rating after 19 years, citing strong economic growth, political commitment to fiscal strength and better monetary policy measures to control inflation.

Relief for India

The rating agency said that India is one of the best performing economies in the world. The quality of government spending has improved in the last 5-6 years. S&P said that US tariffs will have a very limited impact on the Indian economy. According to S&P, India is relatively less dependent on trade and about 60 percent of its economic growth comes from domestic consumption.

It is worth noting that the US agency has improved India's sovereign credit rating at a time when earlier US President Donald Trump had termed the Indian economy as a "dead economy". President Trump has imposed a 25 percent base tariff on India and then an additional 25 percent as a penalty for buying oil from Russia. That is, a 50 percent tariff will come into effect on Indian goods from August 27, which is the highest duty till date.

What does improvement in credit mean?

Improvement in credit will reduce the cost of debt for Indian companies in the international markets. In January 2007, S&P had given India the lowest investment level rating 'BBB-'. This is the first improvement in credit by any global rating agency, in which India has been given a rating one step above the lowest investment level. 'BBB' is an investment grade rating and indicates a country's ability to repay its debt obligations comfortably.

S&P had changed India's credit rating outlook from 'stable' to 'positive' in May last year, indicating that the rating could improve in the next 24 months. While upgrading India's rating, S&P said, "India's improved credit rating reflects strong economic growth along with an improved monetary policy environment that has curbed inflation."