Ratings agency S&P on Wednesday revised its outlook for India to 'positive' from 'stable', citing robust growth and improved quality of government expenditure. While affirming its sovereign rating for India at 'BBB-', the agency said it expects reforms to continue in the country regardless of the outcome of the ongoing polls. It affirmed its 'A-3' short-term unsolicited foreign and local currency sovereign credit rating.

Here are 10 key things to know about this story:  

  • S&P said it expects the fundamentals of the Indian economy to aid growth momentum over the next 2-3 years. 
  • The ratings agency also said it would consider upgrading the country's sovereign rating in the next two years if it adopts a cautious fiscal and monetary policy that diminishes the government's elevated debt and interest burden while bolstering economic resilience. 
  • S&P had last upgraded the rating outlook to 'stable' from 'negative' in 2010.
  • Its current rating of 'BBB-' is the lowest investment grade rating. 
  • "The positive outlook reflects our view that continued policy stability, deepening economic reforms, and high infrastructure investment will sustain long-term growth prospects," S&P said.
  • The agency also said it may raise its rating if the country's fiscal deficit narrows meaningfully such that the general government debt falls below 7.0 per cent of GDP on a structural basis. "We may also raise the ratings if we observe a sustained and substantial improvement in the central bank's monetary policy effectiveness and credibility, such that inflation is managed at a durably lower rate over time," it added.
  • S&P and two other major global rating agencies Fitch and Moody's have accorded the lowest investment grade rating to India. However, Fitch and Moody's still have stable outlook on their ratings.
  • The development comes as India prepares for the seventh and final phase of voting under the 2024 Lok Sabha polls.
  • The outcome of the mega polling exercise in the world's largest democracy is due on June 4.  
  • The credit ratings are looked at by investors as a barometer of a country's creditworthiness. These ratings pose an impact on borrowing costs.