“The stable outlook reflects our view that continued policy stability and high infrastructure investment will support India’s long-term growth prospects,” it noted.
The impact of US tariffs on India will likely be manageable, with sound economic fundamentals expected to support the country's growth momentum over the next two to three years, it said.
"Robust economic expansion is having a constructive effect on India's credit metrics…..In addition, monetary policy settings have become increasingly conducive to managing inflationary expectations," it said.
India remains among the best performing economies in the world, said S&P Global, which expects the growth dynamics to continue in the medium term, with GDP increasing by 6.8 per cent annually over the next three years.
This has a moderating effect on the ratio of government debt to GDP despite still-wide scale deficits, it observed.
If India has to switch from importing Russian crude oil, the fiscal cost, if fully borne by the government, will be modest given the narrow price differential between Russian crude and current international benchmarks, S&P Global said.
It cautioned that it may lower the ratings if it observes an erosion of political commitment to consolidate public finances.
Downward pressure could also come from India's economic growth slowing materially on a structural basis such that it undermines fiscal sustainability, it added.
ALCHEMPro News Desk (DS)
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