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Morningstar DBRS Upgrades India’s Credit Rating to BBB with Stable Outlook

The upgrade reflects India’s robust GDP growth, fiscal reforms, and a resilient banking sector, with potential for further improvements as reforms continue.

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Morningstar DBRS raises India’s credit rating, citing resilient banking sector and fiscal reforms
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Overview

  • Morningstar DBRS raised India’s long-term credit rating from BBB (low) to BBB and short-term rating to R-2 (high), both with a Stable trend.
  • Key drivers include structural reforms, an average GDP growth of 8.2% from FY22–25, and fiscal consolidation supported by digitalisation and transparency measures.
  • India’s banking sector showed significant resilience, with well-capitalised banks and non-performing loans at a 13-year low of 2.5%.
  • Despite high public debt levels, risks to debt sustainability remain limited due to local currency debt denomination and long maturity structures.
  • Continued reforms and further reductions in the public debt-to-GDP ratio could lead to additional upgrades, as regional and external risks remain contained.