Moody's Ratings said on Tuesday that India has remained the most resilient large emerging market economy since 2020, supported by strong foreign exchange reserves that have helped curb currency volatility and strengthen investor confidence during global financial shocks.
In its latest report on emerging markets, Moody’s said India is well positioned to handle future external disruptions due to its clear and predictable monetary policy framework, well-anchored inflation expectations, and a flexible exchange rate regime that can adjust to global conditions when required.
The agency noted that India is ‘better placed’ than many other emerging market sovereigns to manage future stress events and is expected to enter such periods with strong and readily accessible financial buffers.
While highlighting India’s strengths, Moody’s also pointed out that the country’s reliance on domestic funding is supported by deep local financial markets and substantial foreign exchange reserves. However, it warned that relatively high public debt and a weak fiscal balance limit the government’s fiscal space to respond to repeated economic shocks.
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The report added that India had made important policy choices that strengthened macroeconomic stability even before the recent global disruptions began.
According to Moody’s, several large emerging economies have successfully absorbed multiple global shocks over the past five years without significant increases in risk premiums or loss of access to financial markets. It attributed this resilience to improved policy frameworks, stronger buffers, and relatively supportive global financial conditions.
The agency assessed the performance of major emerging markets, including India, Indonesia, Mexico, Brazil, South Africa, Türkiye, and Argentina, across four major stress episodes since 2020. These included the onset of the COVID-19 pandemic, the global inflation surge and US Federal Reserve tightening in 2022, US regional banking stress in early 2023, and renewed tariff-related tensions in 2025.
Moody’s said these events collectively represented a range of external shocks that typically trigger emerging market stress through currency pressure, tighter financing conditions, and refinancing risks. However, it noted that relatively accommodative global financial conditions following these shocks helped emerging economies absorb successive disruptions over the period since 2020.
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