What does the latest S&P rating for the Indian economy really mean?

In fact, S&P has only affirmed India’s sovereign rating at “BBB-”. Now it must be remembered that the above rating is the lower investment grade rating and any downgrade from here would push Indian sovereign debt into speculative category. The positive takeaway is that S&P has maintained its outlook as stable. While S&P appears to be positive on macroeconomic recovery, it has sounded warnings on fiscal deficit.

In fact, in the note S&P expressed confidence that the economic recovery and a higher plane of GDP growth would improve the credit profile of Indian debt and the health of the banks too. However, S&P did caution about too much of fiscal profligacy. S&P appreciated India’s external buffers and its 34% boost to capital spending in the 2021 Union Budget. However, S&P also called for moving forward on structural reforms on a war footing.