Summary:
In a recent evaluation, Morningstar DBRS, an international sovereign credit rating agency, has upgraded India's LongTerm Foreign and Local Currency Issuer Ratings from BBB low to BBB with a Stable trend, following positive developments such as infrastructure reforms underpinned by digitalization. Simultaneously, the agency has also enhanced Indias ShortTerm ratings to R2 high for both foreign and local currency issuance.
The rating upgrade is based on several key success factors in India's economic situation: fiscal consolidation through strategic infrastructure investments, a burgeoning sustainable growth rate averaging 8.2% annually during FY22-25 with maintained macroeconomic stability; a resilient banking sector characterized by adequately capitalized financial institutions with low nonperforming assets; and effectively controlled inflation coupled with a sound external balance.
Further upgrades might be achieved if India continues to implement reforms aimed at boosting investment rates, thereby strengthening its medium-term growth prospects. Additionally, the rating agency highlights that India's debt levels, though not insignificant, pose minimal risks for debt sustainability due to debts being mainly in local currency with relatively long maturities. A continued reduction in public debtToGDP ratio is anticipated to contribute positively towards future ratings enhancements.
Morningstar DBRS' revised assessment signifies an optimistic outlook for India’s fiscal and economic stability, affirming its solid foundation and the ongoing government efforts towards improved investment prospects and stable fiscal policy.
(Note: The source URLs provided lead to Morningstar DBRS's website where one can find detailed information on this rating upgrade.)
---End of Summary---
Key Entities Referenced
Ministry of Finance India: The Indian government ministry responsible for finance and economy.
BBB: Credit rating assigned to Ministry of Finance India by Morningstar DBRS.
Stable: The trend associated with the BBB credit rating assigned to the Ministry of Finance India.
Morningstar DBRS: A global sovereign credit rating agency that upgraded India's credit rating.
Indias ShortTerm Foreign and Local Currency Issuer Ratings: Short-term ratings for foreign and local currency issuance.
R2 high: Upgraded short-term rating for India's foreign and local currency issuer ratings.
R2 middle: Previous short-term rating for India's foreign and local currency issuer ratings.
infrastructure investments: Mentioned as a driver for the ratings upgrade.
digitalisation: Mentioned as a driver for the ratings upgrade.
fiscal consolidation: Mentioned as a driver for the ratings upgrade.
PIB Delhi: Press Information Bureau, Delhi - the source of the information.
Indias LongTerm Foreign and Local Currency Issuer Ratings: Long-term ratings for foreign and local currency issuance.
BBB low: Previous long-term rating for India's foreign and local currency issuer ratings.
FY2225: Fiscal year 2022-2025, during which India experienced an average GDP growth of 8.2%.
Fitch: A credit rating agency whose rating scales are similar to Morningstar DBRS.
SP: A credit rating agency whose rating scales are similar to Morningstar DBRS.
NBKMN Release ID: 2127922: Release ID number
Ministry of Finance
India gets upgraded to ‘BBB’ with a ‘Stable’ trend in
rating by Morningstar DBRS, a global sovereign
credit rating agency
India’s Short-Term Foreign and Local Currency
Issuer Ratings also upgraded to ‘R-2 (high)’ from ‘R-
2 (middle)’ with a ‘Stable’ trend
Key drivers for the ratings upgrade include India’s
structural reforms through infrastructure investments,
digitalisation etc, fiscal consolidation, sustained high
growth with macroeconomic stability, and a resilient
banking system
Posted On: 09 MAY 2025 4:25PM by PIB Delhi
The global sovereign credit rating agency, Morningstar DBRS, upgraded India’s Long-Term Foreign and
Local Currency – Issuer Ratings from BBB (low) to BBB with a Stable trend.
India’s Short-Term Foreign and Local Currency Issuer Ratings were also upgraded to R-2 (high) from R-2
(middle) with a Stable trend.
Key drivers for the upgrade include India’s structural reforms through infrastructure investments,
digitalisation etc., all of which facilitated fiscal consolidation (declining debt and deficit) and
sustained high growth (clocking an average GDP growth of 8.2% during FY22-25) with
macroeconomic stability (stabilised inflation, range bound exchange rate and sound external
balance). A resilient banking system featuring well-capitalised banks with a high capital adequacy
ratio and a 13-year low non-performing loans was another significant driver for the upgrade.
The credit rating may be further upgraded if India continues to implement reforms that raise the
investment rate, enhancing medium-term growth prospects. The report also stated that despite the
current public debt levels, risks to debt sustainability are limited due to local currency denomination
and long maturity structures. Further, continued reforms and a reduction in the public debt-to-GDP
ratio could bring further upgrades.
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).
CLICK HERE TO ACCESS THE REPORT or click on the following link:
https://dbrs.morningstar.com/research/453673/morningstar-dbrs-upgrades-india-to-bbb-trend-changed-to-stable
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NB/KMN
(Release ID: 2127922)