India's non-sovereign debt may nearly double to 150% of GDP by 2047 to fund Viksit Bharat: Crisil

India will need a much deeper and more diversified debt capital market to finance its ambition of becoming a $30 trillion-plus economy by 2047, with non-sovereign debt likely to rise to nearly 150% of GDP from about 84% currently, according to a report by Crisil. 

In its latest report, 'Bonding for Viksit Bharat 2047', the ratings agency said achieving the government's Viksit Bharat vision will require massive funding for corporates, local governments and households while ensuring credit remains affordable across economic cycles. 

Drawing comparisons with developed economies, Crisil noted that the US, the UK, the Euro area, and Japan had non-sovereign borrowing-to-GDP ratios of 140-150% during the early 2000s when they were undergoing rapid economic transformation. Assuming India follows a similar financing trajectory, the country's non-sovereign debt could increase to around 150% of GDP by 2047, a level comparable with those economies during their growth phase. 

While banks have historically financed the bulk of India's credit needs, Crisil warned that their capacity to continue driving credit growth may be constrained by slowing deposit mobilisation and elevated lending levels. 

The report pointed out that the banking sector's credit-deposit ratio exceeded 82% as of March 2026, reflecting growing pressure on bank balance sheets amid sluggish deposit growth in recent years. 

"As India progresses towards the Viksit Bharat vision, the debt capital market will need to play a much larger role in meeting the country's financing requirements," the report said. 

Crisil said the debt capital market—which includes corporate bonds, securitised instruments, municipal bonds and money market securities—remains mostly underdeveloped compared with the banking sector. As of the end of FY26, India's debt capital market was equivalent to around 22% of GDP, far below gross bank credit, which stood at approximately 62% of GDP. 

According to Miren Lodha, Senior Director, Crisil Intelligence, India needs a broader issuer base, greater investor participation and a more active secondary bond market to support long-term economic growth. 

"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," Lodha said. 

The report highlighted that India's corporate bond market remains highly concentrated. More than 80% of outstanding corporate bonds are rated AAA or AA while government-owned entities and financial sector companies have accounted for over 80% of annual bond issuances since FY23. 

Investor participation also remains limited. Retail and foreign investors together account for less than 10% of outstanding corporate bonds, reducing market depth and liquidity. Crisil said a more diversified investor base would improve price discovery, distribute risk more efficiently and make the financial system more resilient across economic cycles. 

The report also emphasised the need to channel the country's growing pool of household savings into capital market instruments. "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, Crisil Ratings. 

He added that achieving this would require regulatory reforms and stronger market infrastructure to expand financing avenues beyond traditional bank lending. 

The report also recommended attracting long-term institutional investors such as insurance companies and pension funds, while encouraging greater investment in A- and BBB-rated corporate bonds. According to Crisil, these mid-rated bonds have demonstrated resilience across economic cycles and have historically delivered superior risk-adjusted returns. 

Another priority identified in the report is the expansion of India's securitisation market, including the introduction of covered bonds. A well-developed securitisation ecosystem would allow financial institutions to recycle capital more efficiently, improving the availability of credit across sectors. 

The report also called for dedicated legislation and enabling regulations to develop the covered bond market, alongside stronger government support for market-based financing. 

Crisil further underscored the importance of strengthening the municipal bond market to finance urban infrastructure. Greater reliance on municipal bonds could reduce the fiscal burden on governments while providing sustainable funding for cities as India urbanises.