India's non-sovereign debt may rise to 150 pc of GDP by 2047: Crisil
New Delhi, July 16
India's non-sovereign debt could rise from approximately 84 per cent of GDP today to around 150 per cent by 2047. This structural shift will be necessary to achieve the government's Viksit Bharat vision of a USD 30+ trillion economy by the calendar year 2047.
The projected debt levels match the borrowing ratios of developed economies like the US, the UK, the euro area, and Japan during their periods of rapid economic transformation in the early 2000s.
According to a report by rating agency Crisil, the banking sector faces limitations in meeting this massive credit demand alone. Sluggish deposit growth in recent financial years and a high credit-deposit ratio of over 82 per cent as of March 2026 constrain the ability of commercial banks to continue heavy lifting.
Consequently, the debt capital market, comprising corporate bonds, securitised instruments, municipal bonds, and money market instruments, must make an outsized contribution.
"A debt capital market capable of financing Viksit Bharat will require a broader issuer base, deeper investor participation across the ratings spectrum, and a more vibrant secondary market trading ecosystem to strengthen price discovery," says Miren Lodha, Senior Director at Crisil Intelligence.
As per the report, India's debt capital market stood at just 22 per cent of GDP at the end of fiscal 2026, which was significantly lower than gross bank credit at 62 per cent of GDP. The corporate bond market also remains highly concentrated, with AAA and AA-rated bonds accounting for over 80 per cent of the market.
Government-owned entities and financial sector issuers contributed more than 80 per cent of annual issuances since fiscal 2023, while retail and foreign investors together accounted for less than 10 per cent of total corporate bonds outstanding.
"As the savings landscape transitions from traditional bank deposits to managed investment products, it is important to develop and effectively utilise market channels to fund critical segments such as infrastructure, housing and urban development under the Viksit Bharat vision," says Somasekhar Vemuri, Chief Criteria Officer at Crisil Ratings.
"This will require regulatory and market infrastructure reforms to further strengthen the existing system," Vemuri added.
The Crisil report noted that transforming the corporate bond market requires attracting patient-capital investors, including insurance and pension funds, alongside improving risk appetite for bonds rated below AAA. Regulatory changes could enable greater investment in mid-rated A and BBB bonds, which have demonstrated resilience across cycles.
Additionally, developing the securitisation and municipal bond markets will expand capital availability through fund recycling and channel market funding toward urban infrastructure, reducing pressure on government finances.
— ANI
Reader Comments
My concern is who exactly is going to lend all this money? Our corporate bond market is tiny compared to banks, and retail investors barely participate. The report itself says AAA/AA bonds dominate 80% of the market. How will mid-rated companies access funding? We need serious regulatory reforms to build confidence in lower-rated bonds. Otherwise, this is just a pipe dream. 🤔
I've been investing in corporate bonds for years, but honestly, the market is still opaque. Price discovery is poor, and liquidity dries up during stress. The report mentions municipal bonds - that's an interesting idea. Imagine cities like Bengaluru or Pune issuing bonds for metro projects instead of relying entirely on central funds. But governance standards need to improve drastically for that to work. 🔍
Working in financial services in Mumbai, I see the disconnect firsthand. Our savings are still overwhelmingly in bank deposits and gold. We need to shift cultural mindset towards bonds and other instruments. Insurance and pension funds could be game-changers if regulations allow them to invest more in A/BBB rated bonds. The Crisil report is right - we need patient capital for long-term infrastructure. Patience is the key word here. 😅
Respectfully, this is reckless optimism. 150% debt-to-GDP is not the same as Japan's because our currency isn't a reserve currency. We can't print money like the US or Japan without triggering inflation. Look at what happened to Sri Lanka when they over-borrowed. We need a balanced approach - maybe target 100-120% while building our capital markets. The Viksit Bharat vision is admirable, but fiscal discipline matters too. 🇮🇳
N We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.