New Delhi: S&P Global Ratings on Thursday retained India's sovereign rating at 'BBB' with a stable outlook, saying India is a dynamic and fast-growing economy with policy predictability.

S&P said high energy prices and challenging agricultural conditions will marginally slow India's growth this year, but economic fundamentals are expected to remain sound and support robust growth over the next two to three years.

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"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 said while affirming its 'BBB' long-term and 'A-2' short-term unsolicited sovereign credit ratings on India.

The outlook on the long-term rating is stable.

The 'BBB' is the investment-grade rating.

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India remains among the best-performing economies in the world, with an average annual growth of 7.9 percent in the last five years, from fiscal 2022 (year-ended March 31, 2022) to fiscal 2026.

"We forecast growth to fall to 6.6 percent this fiscal year on account of an ongoing energy shock and challenging agricultural conditions. But we expect India's strong growth dynamics to continue in the medium term with GDP growth averaging 7 per cent annually over the next three years. This has a moderating effect on the ratio of government debt to GDP despite wide fiscal deficits," S&P added.

Earlier this month, another rating agency, Fitch, too, had affirmed India's rating at 'BBB-', citing a robust domestic economy.

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