India's Sovereign(credit) Rating

 

In spite of the Indian economy's continuous outperformance, the foreign rating agency has not upgraded Indians' credit rating. 

The importance of a good credit rating lies in the fact that it determines the cost of borrowing for a nation. The higher the rating, the lower the interest rate.

As an economy's borrowings are in the trillions, even a 10bps can have a significant impact.

Few factors that are dependent on Sovereign Credit Rating

1. Cost of Borrowing

2. Access to Funding

3. Investor Confidence

4. Currency Value

5. Stock Market and Foreign Investment

   Currently India's debt-to-GDP ratio is well below other emerging markets, standing at 57.1% for the central government at the end of March 2023.

Japan holds the record for the highest debt-to-GDP ratio, exceeding 250%, and has an A sovereign rating by Fitch.

Recently Nikhil Kamath also talked about it in his recent podcast WTF #16

What are your views on Indians Sovereign ratings?

Do you believe India should be upgraded to BB or B?🤔