Key drivers for the ratings upgrade are structural reforms, digitalisation, fiscal consolidation, sustained high growth with macroeconomic stability
| Photo Credit:
NatanaelGinting
India got a rating upgrade to ‘BBB’ with a ‘Stable’ outlook from Morningstar DBRS, a global sovereign credit rating agency, Finance Ministry announced on Friday.
Till date, the agency had given India a ‘BBB-Low’. The rating scale for Morningstar DBRS is similar to the Fitch and S&P rating scales (It uses ‘high’ and ‘low’ as suffixes compared to the +/- nomenclature used by Fitch and S&P). ‘BBB-Low’ or ‘BBB- is the last investment grade
“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,” the Ministry said in a statement, quoting a report by the agency.
At the same time, the agency said the upgrade reflects its view about the cumulative and ongoing benefits of India’s structural reform efforts that are facilitating fiscal consolidation and helping sustain India’s high potential growth rate. The upgrade also reflects a more resilient banking system.
“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 per cent from FY22 –FY25,” the agency said.
Further, fiscal consolidation remains on track with improvements in transparency of government accounts and the quality of spending. Furthermore, Indian banks are in a strong position to support growth, with the ratio of non-performing loans to total loans falling to 2.5 per cent, its lowest level in 13 years. The credit rating action is supported by improvements in the “Fiscal Management and Policy” and “Monetary Policy and Financial Stability”, the agency said.
It noted that rising trade tensions were adversely impacting global growth expectations. The IMF recently revised its global growth forecast down to 2.8 per cent from 3.3 per cent. Although heightened external risks due to the imposition of U.S. tariffs could impact growth in the coming quarters, the Indian economy is not particularly reliant on trade. The IMF expects India to growth 6.2 per cent in current fiscal and 6.3 per cent in next.
The Reserve Bank of India is slightly more optimistic with GDP growth forecasts of 6.5 per cent in current fiscal and 6.7 per cent in next fiscal. “While the near-term outlook is clouded by external risks (i.e. tariff uncertainty, geopolitical tensions, etc.), India’s favorable demographics, high savings, and potential catch-up in technological capabilities suggest that India’s medium-term growth prospects remain strong, the agency said. It also mentioned that government efforts to improve the investment climate and build out both physical and digital infrastructure reinforce the country’s medium-term growth prospects.
Published on May 9, 2025
Key drivers for the ratings upgrade are structural reforms, digitalisation, fiscal consolidation, sustained high growth with macroeconomic stability
| Photo Credit:
NatanaelGinting
India got a rating upgrade to ‘BBB’ with a ‘Stable’ outlook from Morningstar DBRS, a global sovereign credit rating agency, Finance Ministry announced on Friday.
Till date, the agency had given India a ‘BBB-Low’. The rating scale for Morningstar DBRS is similar to the Fitch and S&P rating scales (It uses ‘high’ and ‘low’ as suffixes compared to the +/- nomenclature used by Fitch and S&P). ‘BBB-Low’ or ‘BBB- is the last investment grade
“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,” the Ministry said in a statement, quoting a report by the agency.
At the same time, the agency said the upgrade reflects its view about the cumulative and ongoing benefits of India’s structural reform efforts that are facilitating fiscal consolidation and helping sustain India’s high potential growth rate. The upgrade also reflects a more resilient banking system.
“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 per cent from FY22 –FY25,” the agency said.
Further, fiscal consolidation remains on track with improvements in transparency of government accounts and the quality of spending. Furthermore, Indian banks are in a strong position to support growth, with the ratio of non-performing loans to total loans falling to 2.5 per cent, its lowest level in 13 years. The credit rating action is supported by improvements in the “Fiscal Management and Policy” and “Monetary Policy and Financial Stability”, the agency said.
It noted that rising trade tensions were adversely impacting global growth expectations. The IMF recently revised its global growth forecast down to 2.8 per cent from 3.3 per cent. Although heightened external risks due to the imposition of U.S. tariffs could impact growth in the coming quarters, the Indian economy is not particularly reliant on trade. The IMF expects India to growth 6.2 per cent in current fiscal and 6.3 per cent in next.
The Reserve Bank of India is slightly more optimistic with GDP growth forecasts of 6.5 per cent in current fiscal and 6.7 per cent in next fiscal. “While the near-term outlook is clouded by external risks (i.e. tariff uncertainty, geopolitical tensions, etc.), India’s favorable demographics, high savings, and potential catch-up in technological capabilities suggest that India’s medium-term growth prospects remain strong, the agency said. It also mentioned that government efforts to improve the investment climate and build out both physical and digital infrastructure reinforce the country’s medium-term growth prospects.
Published on May 9, 2025
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It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution
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