India Secures ‘BBB’ Rating with Stable Outlook from Morningstar DBRS

India’s robust economic reforms, consistent fiscal consolidation, and resilient banking system have led global credit rating agency Morningstar DBRS to upgrade the country’s sovereign credit rating. As of May 9, 2025, India’s Long-Term Foreign and Local Currency Issuer Ratings have been upgraded from ‘BBB (low)’ to ‘BBB’ with a Stable outlook. This positive revision signals growing investor confidence and international recognition of India’s economic trajectory.

Why in News?

Morningstar DBRS, a leading global sovereign credit rating agency, has upgraded India’s long-term and short-term credit ratings on May 9, 2025. The upgrade reflects acknowledgment of India’s high GDP growth, fiscal discipline, policy reforms, and stable macroeconomic fundamentals, positioning India more attractively for global investments.

Key Highlights of the Rating Upgrade

• Long-Term Foreign & Local Currency – Issuer Ratings: Upgraded from ‘BBB (low)’ to ‘BBB’ with a Stable trend.
• Short-Term Foreign & Local Currency Ratings: Upgraded from ‘R-2 (middle)’ to ‘R-2 (high)’, also with a Stable trend.

Drivers of the Upgrade

• Structural Reforms: Through infrastructure development, digitalisation, and governance reforms.
• Fiscal Consolidation: Controlled fiscal deficit and declining public debt-to-GDP ratio.
• High Economic Growth: Average GDP growth of 8.2% during FY22-FY25.
• Macroeconomic Stability: Stable inflation, exchange rate, and sound external balances.
• Banking Sector Strength: Well-capitalised banks, high capital adequacy ratio, and lowest NPA levels in 13 years.

Significance of the Rating Upgrade

• Improves investor confidence and global image of India’s economy.
• May lead to lower borrowing costs in international markets.
• Enhances credibility of government reforms and macro policies.
• Reflects resilience against global economic shocks and domestic challenges.

Future Outlook

Further upgrades possible if,

• Public debt-to-GDP ratio reduces.
• Investment rates rise.
• More structural reforms are implemented.

Static & Background Facts

• Morningstar DBRS uses a rating scale similar to Fitch and S&P (uses “high”/“low” instead of “+”/“-”).
• Sovereign Credit Ratings assess a country’s ability to repay its debts.
• ‘BBB’ is considered investment grade, showing moderate credit risk.