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S&P affirms India's BBB rating, flags risk of fiscal slippage in FY27

Rating agency retains stable outlook, citing policy stability and infrastructure investment, but sees risks to Centre's FY27 fiscal deficit target from revenue, subsidy pressures

Krity Ambey 3 min read Last Updated : Aug 27 2026 | 7:51 PM IST

S&P Global on Thursday affirmed India’s sovereign credit rating at BBB and retained its ‘stable’ outlook for the economy, citing policy stability and high infrastructure investment, which is expected to support India's growth prospects. However, the agency also flagged the risk of slippage in the Centre’s fiscal deficit in the current financial year.

“The sovereign credit ratings on India are anchored by a dynamic and fast-growing economy, strong external balance sheet, and stable institutions that support policy predictability,” S&P Global said. “Counterbalancing these strengths are the government's weak fiscal performance and burdensome debt stock, as well as low GDP per capita.”

The agency flagged the risk of slippage in the Centre’s fiscal deficit target due to a likely shortfall in revenue following the cut in excise duty on fuel earlier this year and a potential expenditure overshoot on fertiliser subsidy. “While the union fiscal deficit may exceed its current budget target, we believe India remains committed to fiscal consolidation, even as it maintains its strong infrastructure drive,” S&P Global said.

3 per cent of GDP for 2026-27 (FY27). 9 per cent of GDP by FY30.

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