“The stable outlook reflects our view that continued policy stability and high infrastructure investment will support India’s long-term growth prospects. That, along with cautious fiscal and monetary policy that moderates the government’s elevated debt and interest burden, will underpin the rating over the next 24 months,” S&P Global said.

The upgrade is a motivation for fiscla prudence, Bloomberg reported quoting Chief Economic Adviser V Anantha Nageswaran as saying.

The global rating agency firm said that the ratings could be lowered if it sees a weakening in political commitment to consolidate public finances. Downward pressure could also come from a material slowdown in India’s structural economic growth that undermines fiscal sustainability.

S&P said the upgrade reflects India’s buoyant economic growth and an enhanced monetary policy framework that anchors inflation expectations. “Together with the government’s commitment to fiscal consolidation and efforts to improve spending quality, we believe these factors have coalesced to benefit credit metrics,” it said.