Why Does India Deserve Higher Ratings Beyond BBB?
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Synopsis
Discover why experts believe India’s BBB rating underestimates its financial strength. A detailed report reveals that India's growth, fiscal health, and resilience outshine many higher-rated countries. Can India’s true creditworthiness finally be recognized? Read on to find out more!
Key Takeaways
- India's credit rating does not reflect its true economic strength.
- Consistent real GDP growth outpaces many higher-rated countries.
- Debt-to-GDP ratio expected to decline by FY2029.
- Strong fiscal resources being directed towards capital expenditure.
- India’s fundamentals suggest it deserves a higher rating.
New Delhi, Sep 10 (NationPress) India’s recent elevation to a “BBB” rating by S&P highlights its macroeconomic strength, yet this rating inadequately reflects the nation’s actual credit profile, according to a report released on Wednesday.
“When compared to BBB and even A-rated counterparts, India’s growth trajectory, fiscal discipline, external resilience, banking stability, and institutional credibility demonstrate a much more robust macro profile,” stated MP Financial Advisory Services in their report.
The analysis indicates that these foundational elements imply that India’s creditworthiness aligns more closely with nations that hold higher ratings, prompting discussions on whether the present BBB rating truly represents the country’s credit status.
“Evaluating India’s performance in terms of growth, debt sustainability, external resilience, banking stability, and institutional integrity reveals that its fundamentals not only compare favorably but, in many cases, exceed those of higher-rated economies,” commented Mahendra Patil, Founder and Managing Partner of MP Financial Advisory Services LLP.
Consequently, the current BBB rating significantly underrepresents India’s actual credit strength, which aligns more with nations rated higher across various metrics, he noted.
Over the past decade, India has consistently achieved real GDP growth rates of 6–7 percent, a feat that surpasses most BBB-rated and many A-rated countries, whose long-term average growth typically hovers around 2-3 percent.
The nation’s economic resilience has been tested through numerous global crises — including the 2008 Global Financial Crisis, the 2013 taper tantrum, the COVID-19 pandemic, and fluctuating commodity prices — during which advanced economies often fell into stagnation while India sustained positive growth.
With a debt-to-GDP ratio of 81–82 percent, India’s position is elevated but stable, as the IMF forecasts a gradual decrease to 78 percent by FY2029.
This is favorable when compared to several higher-rated countries: Italy (135 percent), France (110 percent), Belgium (104 percent), and Japan (235 percent). Even though Germany (63 percent) and Canada (69 percent) have lower headline debt, they face weaker growth trends, making their debt levels more persistent.
The report emphasized that India’s nominal GDP growth of 10–11 percent significantly exceeds its effective interest cost of 6–7 percent, creating a beneficial “growth–interest rate” differential.
This positive differential allows India to gradually ‘grow out of debt,’ as solid growth trends reduce debt ratios over time. In contrast, advanced economies like Italy, France, and Japan confront the opposite issue with sluggish growth, as outlined in the report.
“India is increasingly directing fiscal resources towards capital expenditure. The capex has surged from 12 percent of the Union budget in FY2019 to 23 percent in FY2025,” the report concluded.
Point of View
It is crucial to recognize that India's economic fundamentals showcase a narrative that transcends its current rating. This report emphasizes that India's growth potential and stability align more closely with nations rated higher, urging a reevaluation of its credit standing. We must advocate for a recognition that reflects the true strength of our economy.
NationPress
10/09/2025
Frequently Asked Questions
What does the BBB rating signify for India?
The BBB rating indicates a moderate credit risk, but many experts argue it does not accurately reflect India's robust economic fundamentals and growth trajectory.
How has India maintained its economic growth?
India has consistently achieved real GDP growth of 6–7% over the past decade, supported by fiscal discipline and resilience against global economic shocks.
Why is India's debt-to-GDP ratio significant?
India's debt-to-GDP ratio is stable and projected to decrease, showing effective management of fiscal resources compared to many higher-rated nations.
What factors contribute to India's creditworthiness?
Key factors include strong growth, fiscal consolidation, banking stability, and external resilience, all of which suggest a much stronger credit profile than the current rating indicates.
What is the outlook for India's economic future?
With ongoing capital expenditure and positive growth trends, India is positioned to improve its creditworthiness in the coming years, potentially leading to a higher rating.
