Canada-based global credit rating agency Morningstar DBRS has upgraded India’s Long-Term and Short-Term Sovereign Ratings, reflecting the country’s fiscal discipline, resilient banking sector, and sustained economic growth.
Key Highlights
| Rating Type | Old Rating | New Rating | Outlook |
| Long-Term (Foreign & Local Currency) | BBB (low) | BBB | Stable |
| Short-Term (Foreign & Local Currency) | R-2 (middle) | R-2 (high) | Stable |
- Trend on all ratings changed to: Stable (from Positive)
- Significance: India’s rating now aligns more closely with global peers under Morningstar DBRS, and represents a notable upgrade among major rating agencies.
Key Drivers Behind Upgrade
- Structural Reforms:
- Infrastructure development (physical & digital)
- Reforms improving investment climate
- Digitalisation and policy reforms facilitating economic efficiency
- Fiscal Consolidation:
- Ongoing reduction in fiscal deficit and public debt
- Supported by high nominal GDP growth (average 8.2% in FY22–25)
- Resilient Banking Sector:
- High capital adequacy ratio
- 13-year low in non-performing loans (NPLs)
- Favourable Fundamentals:
- Strong domestic savings
- Favourable demographics
- India’s low external trade dependence shields it from global shocks like US tariffs
Rating Agency Comparison
| Agency | Current Rating | Outlook |
| Morningstar DBRS | BBB (Stable) | Upgraded |
| Fitch | BBB- | Stable |
| S&P Global Ratings | BBB- | Positive |
Note: Morningstar DBRS uses “high” and “low” suffixes, unlike Fitch/S&P which use +/-.
Future Outlook & Way Ahead
- Risks to debt sustainability are seen as limited due to:
- High share of debt in local currency
- Long maturity structure of government borrowings
- India’s general government debt-to-GDP for FY25 is ~80.2%, but manageable under current macro conditions.
- Further upgrades possible if:
- Public debt-to-GDP ratio declines further
- Investment rate increases
- Reform momentum continues in key sectors