Crisil: Funding Gap Looms, Corporate Debt Market Needs Boost

Mumbai, Jul 15 (PTI) The current state of the financial ecosystem is most likely to create a "funding gap" in the medium term, which can adversely impact growth, domestic rating agency Crisil said on Wednesday, pitching for attention to the corporate debt market development.

A high quantum of government security issuances is crowding out the corporate bond market, it said.

The corporate debt market, where outstandings have grown at 11 per cent over the last six years to Rs 59.1 lakh crore, accounted for only 22 per cent of the overall debt outstandings at the end of FY26.

Citing its study on the subject, it said, "The financing ecosystem in its current state may face a funding gap even in the medium term".

The agency reminded that the Viksit Bharat vision put forth by Prime Minister Narendra Modi, where India will be a USD 30 trillion economy, requires substantial debt funding.


The non-sovereign debt to gross domestic product (GDP) ratio, which stands at 84 per cent at present, needs to move up to over 140 per cent, it said.

India Inc will be needing debt support of up to Rs 140 lakh crore in the next five fiscal years alone, it said.

Growth in the corporate bond market only tells half the story, and the activity continues to face challenges like issuances concentrated in the high-rated categories, a shallow repo market, low liquidity in the secondary market and limited retail participation, the agency added.

There is a need for a transformative shift in terms of scale, depth and liquidity in the debt market, it said.

Apart from the corporate debt market, growth in the securitisation and municipal bond market will also be helpful.