Sovereign rating upgrade a shot in the arm for India
thehansindia.com -- Friday, August 15, 2025, 9:55:19 PM Eastern Daylight Time
Categories: U.S.–China Relations, Economic Policy & Jobs, Trade Policy & Tariffs
There was good news for India on the economic front on the eve of its 79th Independence Day. The US-based S&P Global Ratings on Thursday upgraded...
There was good news for India on the economic front on the eve of its 79th Independence Day. The US-based S&P Global Ratings on Thursday upgraded India's sovereign rating to 'BBB' with a stable outlook from a junk investment grade of 'BBB'. This upward revision has come after nearly two decades with the last one being in January 2007.
This time around, S&P cited robust economic growth, political zeal for fiscal consolidation and effective monetary policy framework for taming inflation as the key reasons for its positive take on India and its economy. For the uninitiated, BBB is an investment grade rating that indicates improved credit metrics of a country to effectively meet its debt obligations. This higher rating means the Indian companies can raise funds and loans from the international market at a lower cost; so will the government. Ironically, the rating upgrade has come from a US-based agency at a time when India is staring at an uncertain path when it comes to its growing trade with the US.
For some inexplicable reasons, the maverick US President Donald Trump slapped 25 per cent import duties on Indian goods from August 7 before doubling it to 50 per cent, which will come into effect on August 27. Warning of more tariffs, Trump called India a 'dead economy'. But the S&P's latest take proves that Trump's harsh comments are far from the truth, vis-à-vis the Indian economy, which is among the world's best performing economies. "The quality of government spending has improved in the past five to six years," the rating agency stated. It added that the US tariffs will not have a material impact on the economy as the country's growth story is largely driven by domestic consumption.
Quite expectedly, the Union Finance Ministry welcomed the much-awaited rating upgrade, and said economic policies pursued by the Narendra Modi government helped India get the higher rating. Experts opine that India would continue its growth momentum in the coming years. The Indian government has been trying for its sovereign rating revision for quite some time. Vexed with the attitude of US-based rating agencies and their dominance globally, India and other members of BRICS bloc even contemplated floating their own credit rating agency. But that idea didn't fructify due to various reasons.
But India needs to do a lot more on the structural reforms front to put its economy on a higher growth path and secure a much higher sovereign rating. Higher economic growth is essential for it to become the world's third largest economy in the next few years. Currently, India shares 'BBB' rating with Indonesia while Germany and Singapore top the list with AAA rating followed by US (AA+), UK and South Korea (AA), France (AA-), China (A+) and Malaysia (A-). When it comes to rating from other agencies, Moody's rated India at Baa3, while Fitch gave 'BBB'.
Recently, DBRS, a Canada-based rating agency, upgraded India to 'BBB'. However, India must achieve a lot more on the economic front to move up on the rating scale. But for the time being, S&P's rating upgrade is a shot in the arm for the country, which can use it as a platform to enhance its global image and consolidate its economy amid global trade wars unleashed by the US President and geopolitical uncertainties in the wake of the long-lasting Russia-Ukraine war and rising conflicts in the Middle East
Sign Our PetitionThe recent upgrade of India's sovereign credit rating by S&P Global Ratings from a junk status to 'BBB' can be seen as a significant turning point for the country's economy, especially as it coincides with the eve of India's 79th Independence Day. This announcement is not merely a reflection of India’s economic progress but also highlights the complex interplay between domestic policies, global economic structures, and the historical context of economic independence. The upgrade signals that India's economic narrative is shifting; however, it is essential to unpack this development within the broader framework of historical struggles and systemic inequalities.
Historically, India has grappled with the challenges of economic independence since gaining sovereignty in 1947. The legacy of colonialism left deep scars, and the post-independence economic policies were often geared towards self-reliance and social welfare. However, the liberalization policies initiated in the early 1990s marked a shift towards a market-driven economy, which has sometimes been criticized for favoring corporate interests over the needs of the marginalized. The recent credit rating upgrade may be celebrated by the government as a validation of its economic strategies, but it is crucial for citizens and analysts alike to question whose interests are truly being served. The narrative of economic growth must not overshadow the persistent inequalities that plague vast swathes of the population.
The S&P’s assessment cites robust economic growth, effective monetary policy, and improved government spending as reasons for its upgrade. However, this perspective lacks a nuanced understanding of the socio-economic realities faced by many Indians, especially in the context of rising inflation and unemployment rates. The government's fiscal policies may have garnered praise from rating agencies, but the lived experiences of everyday citizens reveal a different story. As many grapple with the high cost of living and inadequate social safety nets, it is imperative to connect the dots between credit ratings and the tangible impacts on ordinary people's lives. The ultimate measure of economic success should be the well-being of the populace, not merely the metrics favored by external agencies.
Moreover, the mention of India’s domestic consumption as a driving force for its economic growth raises questions about the sustainability of such a model. While it is true that the Indian economy is significantly driven by its internal markets, this consumption must be supported by equitable wage distribution and access to basic services. The rise of the gig economy and precarious employment conditions pose significant challenges to the stability of domestic consumption. It is essential for policymakers to recognize the need for structural reforms that prioritize comprehensive labor rights and social justice, rather than solely focusing on credit ratings and foreign investments. Such reforms would ensure that economic growth translates into improved living standards for all citizens, particularly the most vulnerable.
Additionally, the backdrop of US-India trade relations complicates the narrative surrounding the credit rating upgrade. The tariffs imposed by the Trump administration serve as a stark reminder of the fragility of global economic ties and the potential for geopolitical tensions to disrupt economic progress. The irony of a US agency upgrading India's credit rating amidst punitive trade measures is not lost on those who understand the dynamics of international trade and power. The global economic landscape is increasingly shaped by competition among nations, and India must navigate these complexities while fostering an inclusive economy that is resilient to external shocks.
In conclusion, while the upgrade in India’s sovereign rating may signal positive economic indicators, it is paramount to contextualize this achievement within a broader historical and socio-political framework. The pursuit of higher credit ratings should not come at the expense of social equity and justice. As the conversation around India's economic future continues, it is crucial for advocates to highlight the need for policies that empower all citizens, ensuring that the growth narrative is inclusive and reflective of the diverse realities across the nation. Only by addressing the underlying structural disparities can we truly honor the spirit of independence and pave the way for a more equitable and just society.
The recent upgrade of India's sovereign rating by S&P Global Ratings, moving from a junk investment grade of 'BBB' to a stable 'BBB', presents an intriguing juxtaposition against the backdrop of global economic dynamics and domestic policy decisions. This rating upgrade, the first in nearly two decades, is a testament to India's economic resilience and the government's approach towards fiscal responsibility and effective monetary policy. However, this moment of optimism is clouded by the impending challenges posed by international trade disputes, particularly with the United States, which has seen an escalation in protectionist measures under previous administrations. The implications of this rating change are not only significant for investors but also for the broader narrative of economic nationalism and the increasing need for countries to navigate the complexities of global capitalism.
From a historical perspective, India's journey towards economic stability has been fraught with challenges, particularly since the economic liberalization policies of the early 1990s. The current government's emphasis on "Make in India" and other initiatives aimed at boosting domestic production and consumption reflects a strategic pivot away from dependency on external markets. The rating upgrade from S&P can be viewed as an acknowledgment of these efforts. However, it should also serve as a call to action for a deeper examination of the structural reforms necessary to sustain this growth. As we observe the global landscape shift towards a multipolar world, India's ability to enhance its economic standing will depend heavily on its internal cohesion and the equitable distribution of wealth generated by this growth.
Despite the positive outlook from S&P, the challenges posed by the trade tariffs enacted by the former U.S. administration underscore a critical reality: economic health cannot be insulated from international relations. The increase in tariffs on Indian goods, labeled as part of a broader trend of economic nationalism, highlights the precarious nature of relying on foreign markets. As citizens, we must advocate for policies that prioritize domestic industries while simultaneously fostering international relationships that are based on mutual benefit rather than adversarial competition. Engaging in discussions at local and national levels about the importance of protecting our domestic economy in the face of external threats is essential. There is a need for a collective effort to support local businesses and industries, ensuring they can thrive independently of fluctuating foreign policies.
Moreover, the idea floated by India and other BRICS nations of establishing a credit rating agency to counter the dominance of Western agencies like S&P reflects a growing awareness of the need for sovereignty in financial assessments. This proposal is not merely about creating alternative financial metrics; it is about reclaiming autonomy over economic narratives that affect millions of lives. For us as engaged citizens, it is imperative to push for transparency and accountability in financial institutions, demanding that they reflect the realities of our economies rather than perpetuating narratives that may serve geopolitical interests. Engaging with policymakers and advocating for a cooperative framework amongst emerging economies could also help shift the balance of power from established Western institutions.
In light of these developments, we must also recognize that economic growth is not an end in itself but a means to achieve broader social goals. The focus on fiscal consolidation and robust growth should be accompanied by a commitment to social equity and environmental sustainability. As we discuss the implications of India's rating upgrade, it's crucial to raise awareness about the need for policies that bridge the gap between economic performance and social welfare. Advocacy for higher standards in labor rights, environmental protections, and equitable wealth distribution must be at the forefront of our discussions, ensuring that the benefits of economic growth are shared widely, rather than concentrated in the hands of a few.
In conclusion, the upgrade of India's sovereign rating is both a victory and a challenge. It provides an opportunity to reflect on our economic policies and their implications for the future. As we engage in political discourse, let us remain vigilant in advocating for policies that prioritize equitable growth, challenge economic nationalism, and emphasize the need for structural reforms that benefit all citizens. By fostering informed discussions and collective action, we can contribute to shaping a future where economic prosperity is synonymous with social justice and responsibility.
The recent upgrade of India's sovereign rating by S&P Global Ratings is an important moment that signals potential economic growth and investment opportunities. However, it’s essential to be aware of the underlying challenges and the broader context, particularly in relation to global trade dynamics and domestic policies. Here's a detailed list of ideas and actions we can take to engage with this development constructively:
### What Can We Personally Do About This?
1. **Educate Ourselves and Others**: Understand the implications of sovereign ratings, the role of credit rating agencies, and the impact of global trade policies on local economies. Sharing this knowledge can empower others to engage in informed discussions.
2. **Support Local Economies**: Encourage local businesses and initiatives that align with sustainable and ethical practices. By prioritizing local consumption, we can help mitigate the impact of external economic pressures.
3. **Advocate for Policy Changes**: Engage with policymakers to advocate for structural reforms that support equitable growth, social welfare, and environmental sustainability.
4. **Participate in Community Initiatives**: Join or support local groups that focus on economic justice, fair trade, and responsible consumption.
### What Exact Actions Can We Personally Take?
1. **Sign Petitions**: - **Petition for Fair Trade Practices**: Find platforms like Change.org or Avaaz.org to support petitions urging the government to negotiate fair trade agreements that protect local industries from unfair tariffs. - **Example**: Search for petitions addressing trade policies with the U.S. that affect Indian businesses and sign those advocating for fair treatment.
2. **Contact Representatives**: - **Who to Write to**: Reach out to your local Member of Parliament (MP) or elected official who represents your constituency. - **Example Contact**: - **MP Name**: [Your Local MP's Name] - **Email Address**: [Find specific emails through the official government website] - **Suggested Message**: ``` Subject: Support for Fair Trade Policies
Dear [MP's Name],
I hope this message finds you well. I am writing to express my concern regarding the recent trade tensions between India and the United States, particularly in light of the tariffs imposed on Indian goods. While India's sovereign rating upgrade is encouraging, I believe it is essential for our government to engage in negotiations that protect our local industries and promote fair trade practices.
I urge you to advocate for policies that prioritize sustainable growth and support our domestic economy. Thank you for your attention to this matter.
Sincerely, [Your Name] [Your Contact Information] ```
3. **Join Advocacy Groups**: - **Organizations to Connect With**: Look for groups that focus on economic reform, such as the Centre for Policy Research (CPR) or the Economic Policy Institute. Participate in their campaigns or initiatives.
4. **Engage in Local Discussions**: - **Attend Town Halls or Community Meetings**: Share your thoughts on economic policies and trade issues affecting your community. Encourage dialogue around sustainable development and local economic resilience.
5. **Promote Sustainable Practices**: - **Support Cooperatives and Fair Trade**: Buy from local cooperatives or businesses that ensure fair wages for workers. Advocate for sustainable practices by sharing information on social media or community boards.
6. **Write Opinion Pieces**: - Contribute to local newspapers or online platforms discussing the importance of sovereign ratings, economic justice, and the impact of global trade on local communities.
7. **Monitor and Participate in Economic Platforms**: - Engage in forums or webinars hosted by economic think tanks to understand current trends and contribute your voice to discussions about India's economic future.
By taking these actions, we can collectively influence the discourse around economic policies in India, ensuring they are equitable, sustainable, and beneficial for all citizens.