India's non-sovereign debt could rise significantly from the current level of approximately 84 per cent of GDP to around 150 per cent by 2047, as the country seeks to achieve the government's Viksit Bharat vision of becoming a USD 30 trillion-plus economy, rating agency Crisil said in a report.
The projected increase in debt is expected to be a structural requirement for financing India's long-term economic transformation. According to Crisil, the debt levels being envisaged are comparable to borrowing ratios seen in developed economies such as the United States, the United Kingdom, the euro area and Japan during periods of rapid economic transformation in the early 2000s.
However, the rating agency said India's banking sector alone may not be able to meet the massive credit demand expected over the coming decades. Slower deposit growth in recent financial years and a high credit-deposit ratio of over 82 per cent as of March 2026 have limited the ability of commercial banks to continue driving credit expansion at the required scale.
As a result, Crisil said the debt capital market will need to play a much larger role in financing India's growth ambitions. The market includes corporate bonds, securitised instruments, municipal bonds and money market instruments.
"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," said Miren Lodha, Senior Director at Crisil Intelligence.
The report noted that India's debt capital market stood at only 22 per cent of GDP at the end of fiscal 2026, significantly below gross bank credit, which stood at 62 per cent of GDP. The corporate bond market also remains heavily concentrated, with AAA- and AA-rated bonds accounting for more than 80 per cent of the total market.
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The concentration is also reflected in the issuer profile. Government-owned entities and financial sector issuers have accounted for over 80 per cent of annual issuances since fiscal 2023. At the same time, retail and foreign investors together held less than 10 per cent of total corporate bonds outstanding, highlighting the need to broaden investor participation.
"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," said Somasekhar Vemuri, Chief Criteria Officer at Crisil Ratings.
He added that achieving this objective would require regulatory and market infrastructure reforms to further strengthen the existing financial system.
Crisil said transforming the corporate bond market would require greater participation from patient-capital investors, including insurance companies and pension funds. The report also called for improved risk appetite for bonds rated below AAA.
Regulatory changes could encourage greater investment in mid-rated A and BBB bonds, which have shown resilience across economic cycles, the report said.
In addition, developing securitisation and municipal bond markets could expand the availability of capital by enabling fund recycling and directing market-based financing towards urban infrastructure. Such measures could also reduce the pressure on government finances as India undertakes large-scale development under its Viksit Bharat vision.
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