Citing sustained structural reforms, improved fiscal metrics, and macroeconomic resilience, global rating agency Morningstar DBRS has upgraded India’s sovereign credit rating to ‘BBB’ with a stable trend. The agency said the rating revision reflects India’s strengthened economic fundamentals, supported by continued infrastructure investment, digital transformation, and a more robust banking sector.
"The upgrade reflects Morningstar DBRS's view that the cumulative and ongoing benefits of India's structural reform efforts are facilitating fiscal consolidation and helping sustain India's high potential growth rate. The upgrade also reflects a more resilient banking system," DBRS Morningstar said, as reported by news agency PTI.
The agency noted that India’s economy is not particularly reliant on trade, which limits vulnerability to external shocks like heightened US tariffs. It also highlighted positive fundamentals such as favourable demographics, strong domestic savings, and advances in technology that bolster medium-term growth.
India’s recent efforts to improve the investment climate and build out both physical and digital infrastructure were also cited as reinforcing the country’s growth outlook.
Sharing Morningstar DBRS' sovereign rating upgrade, the Finance Ministry in a statement said, "the rating scale for Morningstar DBRS is similar to the Fitch and S&P rating scales (Morningstar DBRS uses 'high' and 'low' as suffixes compared to the +/- nomenclature used by Fitch and S&P)."
While Fitch continues to hold India at 'BBB-' with a stable outlook and S&P Global Ratings recently revised India’s outlook to positive, the Morningstar DBRS move marks a notable upgrade among major agencies. India continues to engage with global agencies in pursuit of further rating improvements, which remain contingent on debt reduction.
Key drivers of the upgrade include India’s fiscal discipline through lower deficits and debt levels, as well as an average GDP growth of 8.2 per cent during FY22-25, supported by stabilised inflation and a sound external balance.
Another critical factor was the health of the banking sector. With a high capital adequacy ratio and a 13-year low in non-performing loans, India’s banking system has shown marked improvement.
Canada-based Morningstar DBRS said further upgrades are possible if India maintains its reform momentum and investment rates to support medium-term growth.
The agency noted that while public debt remains elevated — with a general government debt-to-GDP ratio at 80.2 per cent in FY25 — the risks are limited by the local currency denomination and long maturity structure of government borrowings. It added that continued reforms and a declining debt-to-GDP ratio could lead to more upgrades in the future.
"India's well-regulated financial system, credible inflation-targeting regime, and flexible exchange rate also enhance the economy's resilience to shocks," it said.
"The upgrade reflects Morningstar DBRS's view that the cumulative and ongoing benefits of India's structural reform efforts are facilitating fiscal consolidation and helping sustain India's high potential growth rate. The upgrade also reflects a more resilient banking system," DBRS Morningstar said, as reported by news agency PTI.
The agency noted that India’s economy is not particularly reliant on trade, which limits vulnerability to external shocks like heightened US tariffs. It also highlighted positive fundamentals such as favourable demographics, strong domestic savings, and advances in technology that bolster medium-term growth.
India’s recent efforts to improve the investment climate and build out both physical and digital infrastructure were also cited as reinforcing the country’s growth outlook.
Sharing Morningstar DBRS' sovereign rating upgrade, the Finance Ministry in a statement said, "the rating scale for Morningstar DBRS is similar to the Fitch and S&P rating scales (Morningstar DBRS uses 'high' and 'low' as suffixes compared to the +/- nomenclature used by Fitch and S&P)."
While Fitch continues to hold India at 'BBB-' with a stable outlook and S&P Global Ratings recently revised India’s outlook to positive, the Morningstar DBRS move marks a notable upgrade among major agencies. India continues to engage with global agencies in pursuit of further rating improvements, which remain contingent on debt reduction.
Key drivers of the upgrade include India’s fiscal discipline through lower deficits and debt levels, as well as an average GDP growth of 8.2 per cent during FY22-25, supported by stabilised inflation and a sound external balance.
Another critical factor was the health of the banking sector. With a high capital adequacy ratio and a 13-year low in non-performing loans, India’s banking system has shown marked improvement.
Canada-based Morningstar DBRS said further upgrades are possible if India maintains its reform momentum and investment rates to support medium-term growth.
The agency noted that while public debt remains elevated — with a general government debt-to-GDP ratio at 80.2 per cent in FY25 — the risks are limited by the local currency denomination and long maturity structure of government borrowings. It added that continued reforms and a declining debt-to-GDP ratio could lead to more upgrades in the future.
"India's well-regulated financial system, credible inflation-targeting regime, and flexible exchange rate also enhance the economy's resilience to shocks," it said.
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