The sovereign ratings’ upgrade by S&P Global is due to the hard work done by the Department of Economic Affairs (DEA), and the Chief Economic Adviser (CEA), said Finance Minister Nirmala Sitharaman on Friday.
"They (DEA and CEA) have been persistent with them, talking to them…their conversations have shown us the result," Sitharaman told Network 18's Group Editor in Chief Rahul Joshi in an exclusive interview today, adding that the officials should continue engaging with other agencies also.
On August 14, S&P Global upgraded India's long-term sovereign credit ratings to 'BBB' from 'BBB-' for the first time since 2007 citing economic resilience and fiscal consolidation, a decision that has been welcomed by the government.
India’s ratings outlook was last upgraded to 'Positive' from 'Stable' in 2024, a change which was initiated after a decade when the outlook was raised from 'Negative' to 'Stable'.
"With our growth being what it is, with our fiscal, macro-economic fundamentals being what they are. With our inflation being under control, our FX reserves growing, and with our stock market being so buoyant. It’s difficult to understand, how parameters of similar and compare nature elsewhere attract a much better ratings, whereas ours don’t," noted the FM.
"Conversely, parameters which worse than ours seem to have a much better rating," she said, adding that DEA should continue talking to other agencies as well.
Moodys’ and Fitch, the other two major credit rating agencies, have kept India’s sovereign ratings unchanged at their lowest-investment grade levels, 'Baa3' and 'BBB-', since 2006 and 2007, respectively.
The RBI, in its August Bulletin, noted that the ratings upgrade by the S&P Global bodes well for the capital flows and sovereign bond yield.
The bulletin added that the S&P’s sovereign rating upgrade for India – underpinned by buoyant economic growth, enhanced monetary policy credibility and government’s commitment to fiscal consolidation – could potentially lead to a reduction in borrowing costs, greater investor confidence and higher foreign capital inflows, going forward.
However, 10-year G-sec yields firmed up during mid-July to early August, amidst uncertainties over India-US trade negotiations and receding expectations of further monetary policy easing, bulletin said.
Following the announcement of S&P’s upgrade of India’s sovereign rating on August 14, 2025 the 10-year G-sec yields eased briefly. Thereafter, yields hardened during the third week of August.
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