New Delhi: Finance minister Nirmala Sitharaman on Monday called for a fundamental rethink of global sovereign credit rating systems, arguing that they often fail to reflect the economic resilience and structural strengths of emerging markets.
Speaking at the International Business Forum, the 4th International Conference on Financing for Development in Spain, Sitharaman pointed to India’s strong macroeconomic fundamentals, including sustained high growth and prudent fiscal management, as evidence that current ratings undervalue the country’s stability.
“India, for example, with a sustained high growth trajectory and sound fiscal management, its sovereign rating does not fully reflect its macroeconomic stability,” she said.
“Reforming rating methodologies would not only enhance fairness but also reduce financing costs and unlock far greater volumes of private investment.”
India has been actively pushing for a sovereign credit rating upgrade.
In May 2025, Morningstar DBRS upgraded India’s sovereign credit rating to ‘BBB’ with a ‘stable’ outlook, marking a notable step up from its earlier ‘BBB (low)’ rating.
The upgrade places Morningstar DBRS ahead of other major rating agencies. Both Fitch and S&P maintain India at ‘BBB-’, the lowest investment-grade rating, accompanied by stable and positive outlooks, respectively.
Sitharaman also said that despite growing global consensus, actual financial flows to emerging markets and developing economies (EMDEs) have struggled to gain momentum.
“This underscores the need for early, structured engagement between MDBs (multilateral development banks) and credit rating agencies to recalibrate risk assessments and unlock sustainable capital at scale,” she added.
Sitharaman made a strong pitch for unlocking private capital to drive sustainable development, urging global policymakers and financial institutions to shift focus from pledges to implementation.
“In an era of volatile foreign investment and rising global uncertainty, private capital has emerged as an increasingly critical pillar of development finance,” she said.
Sitharaman warned that emerging markets continue to face entrenched barriers, ranging from high financing costs and limited bankable projects to regulatory gaps and elevated risk perceptions.
Meanwhile, on sustaining India’s growth story, Sitharaman said that unlocking capital at the grassroots is crucial along with empowering micro, small and medium enterprises (MSMEs).
“These engines of inclusive growth need access to credit, technology, and capacity-building, along with simplified compliance frameworks,” she said.
“India’s initiatives—ranging from credit guarantees and stress-period financing to e-Commerce Export Hubs—have improved MSME creditworthiness and global value chain integration.”
Sitharaman said that mobilizing private capital is not merely a financing strategy as it is a development imperative.
“With coordinated action, thoughtful regulation, and shared ambition… we can ensure that private investment becomes a force for inclusive, sustainable, and resilient growth,” she added.