Moody’s Ratings on Monday has affirmed India’s long-term local and foreign-currency sovereign ratings and retained its “stable” outlook, citing sustained strength in its economy and reliable domestic funding for its budget deficits.
India’s long-term local and foreign-currency issuer ratings and the local-currency senior unsecured rating remain at Baa3. The other short-term local-currency rating stands at P-3, it said.
Last month, S&P upgraded India to ‘BBB’, its first such upgrade in 18 years, prompting the government to respond that it expected other rating houses to follow suit, while Fitch maintained its ratings, citing high levels of fiscal deficits and debt.
Moody’s said it left India’s credit rating and outlook unchanged as it believes the country’s strengths - such as its large and fast-growing economy, strong foreign reserves, and reliable domestic funding for its budget deficits - will remain steady.
“These strengths lend resilience to adverse external trends, in particular as high U.S. tariffs and other international policy measures hinder India’s capacity to attract manufacturing investment.”
However, it also echoed Fitch, noting that despite the government’s commitment to fiscal consolidation, its recent measures to reinforce private consumption would erode the government’s revenue base amid its high debt burden.
India’s federal government raised income tax thresholds in the latest budget, removing direct tax liabilities for many lower- and middle-income households. It also lowered goods and services tax rates in September 2025.
The ratings agency stated that India could receive an upgrade if there is a significant improvement in the affordability of its high debt burden, bringing it more in line with higher-rated peers.
This would likely entail fiscal measures that durably raise revenue, narrow the fiscal deficit and contribute to a more marked decline in debt, it added.
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