S&P upgrades India's rating outlook to positive on growth, improved govt spending

S&P upgrades India's sovereign rating outlook to positive, citing robust growth and improved government expenditure quality

S&P Global Ratings on May 29 upgraded India's sovereign rating outlook to positive from stable while retaining the rating at 'BBB-' on robust growth and improved quality of government expenditure.

S&P said it could upgrade India's sovereign rating in the next two years if the country adopts a cautious fiscal and monetary policy that diminishes the government's elevated debt and interest burden while bolstering economic resilience.

"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.

S&P revised outlook on India to positive from stable. At the same time, it affirmed BBB- long-term and 'A-3' short-term unsolicited foreign and local currency sovereign credit ratings, it said.

BBB- is the lowest investment grade rating. The agency had last upgraded the rating outlook to stable from negative in 2010.

The U.S..-based agency said it may raise the ratings if India's fiscal deficit narrows meaningfully such that the general government debt falls below 7% of GDP on a structural basis.

"The protracted rise in public investment in infrastructure will lift economic growth dynamism that, combined with fiscal adjustments, could alleviate India's weak public finances.