Morningstar DBRS, a world ratings agency, has upgraded its rating of India’s long-term and short-term debt on the premise of the nation’s structural reform efforts, fiscal consolidation, resilient banking system, and high potential growth charge.
India’s long-term rating was raised to BBB from BBB (low), whereas short-term rating was raised to R-2 (high) from R-2 (center).
“The successful implementation of reforms coupled with infrastructure investment and rapid digitalization have helped drive India’s recovery in the post-pandemic period, with GDP expanding on average by 8.2% from FY22 (April 2021 to March 22) to FY25,” Morningstar DBRS mentioned in its ratings rationale doc. “Fiscal consolidation remains on track with improvements in transparency of government accounts and the quality of spending.”
The ratings agency additionally famous that inflation has returned to the Reserve Bank of India’s consolation band, and that the exterior sector is robust.
“While the imposition of U.S. tariffs adds uncertainty to the outlook, India looks comparatively well-positioned, given the low level of goods exports to the U.S. and the domestic-driven nature of the Indian economy,” the agency added.
However, it additionally raised a number of issues relating to India’s high deficits and debt ranges.
“Despite recent improvements, India’s perennially large fiscal deficits and elevated government debt levels characterise the country’s credit profile,” the agency famous. “On a general government basis, the public debt-to-GDP ratio has moderated since the shock of the pandemic but remains high at 80.2% in FY25.”
Morningstar DBRS added that it might additional improve India’s credit score ratings if it does a mixture of issues: continues implementing reforms that elevate the nation’s funding charge and materially cut back the general public debt-to-GDP ratio.
Published – May 10, 2025 03:08 pm IST
