Mint Quick Edit | India’s S&P upgrade: Better late than never

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Though India could be slapped with tariffs of 50% by the US before month-end, the rating agency believes their effect will be “manageable" given the economy’s low reliance on trade, with 60% of its growth  stemming from domestic consumption. 

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With the upgrade, India’s rating has moved one notch above the lowest investment grade, where it had been stuck for years. 

Indeed, India’s high growth stands out globally and, to the government’s credit, it has been reversing its covid-triggered fiscal expansion with long-term debt sustainability in mind. Also, the quality of public spending has improved, with an emphasis on infrastructure.

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Our nominal GDP growth can safely be expected to stay ahead of the rate of interest paid on public debt. So long as this lead holds, what’s owed won’t spiral out of control. Let’s hope this upgrade eases the Centre’s borrowing cost by making its bonds more attractive to investors.