Among major states, highest proportion of rated entities have defaulted in Odisha and Chandigarh over a three-year period; Goa and Rajasthan record the lowest number in this regard

Odisha has the highest proportion of rated entities defaulting in India, followed by those in Chandigarh, Telangana, Chhattisgarh and Uttarakhand. Nearly 35% of rated entities in these states have defaulted on average over a three years period, classifying these states as most stressed in this regard. Furthermore, every 4 out of 10 rated entities have defaulted in the states of Odisha and Chandigarh during the time frame. Closely followed by Chhattisgarh and Uttarakhand with over 2 entities defaulting among every 10 rated.

States of Madhya Pradesh, Gujarat and Rajasthan have the lowest proportion of entities that have defaulted over a three years period. The average proportion of entities defaulting is less than 1 out of every 10 rated. Not surprisingly, industrialized and wealthier states such as Maharashtra, Tamil Nadu, Delhi, Karnataka and Gujarat collectively average less than 1 in this regard and are categorized as moderately stressed and least stressed as compared to their peers. Overall, a little over 7% of rated entities in the mentioned industrial states have defaulted.

It’s a mixed result for north eastern states as Meghalaya, with an overall default proportion of 24% is categorized as highly stressed. Assam on the other hand, with a default proportion of just 2.4% over a period of three years is however classified in the least stressed category. Among union territories, Delhi is probably the best performing sub-sovereign among its peers. The national capital territory is classified under the moderately stressed category with a default proportion of 8.6%. Pondicherry as well as Dadra and Nagar Haveli are however under the most stressed and stressed category, with the latter recording a default proportion of over 19%.

Unexpectedly, poorer and relatively underdeveloped states such as Bihar and West Bengal have recorded stellar performance in this study and are categorized in moderately stressed and least stressed category. We believe this to be caused by the presence of a higher number of state-owned enterprises (vis-à-vis private rated entities) in the case of Bihar and several blue-chip companies head quartered in Kolkata, in the case of West Bengal. The overall default proportion for Bihar and West Bengal is recorded at 6.7% and 10%, respectively.

Large and populace states such as Uttar Pradesh and Madhya Pradesh find themselves in the moderately stressed and least stressed categories with a default proportion of 13% and 6.8%, respectively. North Indian heavy weights such as Punjab, Himachal Pradesh and Haryana are also found to be under significant strain considering their default proportions are within the range of 13.5% and 16.7%. High stress levels in sectors such as Textiles, Agriculture & Allied, Transport & Logistics and Infrastructure are likely cause given the concentration in these states.

Incidentally, most states with highest defaults are among India’s fastest expanding in terms of GDP growth. Even though a correlation exercise was not attempted, it was found that states such as Andhra Pradesh (+11.2%), Telangana (+10.2%), Odisha (+8.8%), Meghalaya (+8.3%) and Chhattisgarh (+7.5%) are contributing to a majority of India’s overall expansion and adding incremental thrust.


In this study to asses state wise defaults among rated entities across the country, we categorized 28 Indian states in four categories, namely, Most Stressed (led by Odisha), Stressed (led by Andhra Pradesh), Moderately Stressed (led by Uttar Pradesh) and Least Stressed (led by Madhya Pradesh). A public sample of over 3000 rated (long term) entities, including those defaulting over a three years period was then analyzed. Each category consists of seven states of varying size and level of economic development. On average, the seven states in the most stressed category record a default proportion (of rated entities) at 35%, followed by those in the stressed category with a proportion of 16.6%. The other two categories consisting of moderately stressed and least stressed states, record a proportion of 10% and 5.1%, respectively.


GDP Growth #

Default Proportion
















Andhra Pradesh



Himachal Pradesh



Uttar Pradesh












# Two Year Average Growth (Constant Prices)
Source: ProwessIQ; Acuité Research
Our exciting journey started in 2005 with rating of bank borrowers most of whom were small and medium enterprises. At that time, credit rating was a concept known only to large issuers of capital market instruments. Since then, like a caterpillar transforms itself into a beautiful butterfly, we transformed to rate bonds, bank facilities of large corporates and issuers across industries. Along came many achievements - SEBI Registration in 2011, RBI accreditation in 2012, 50,000 ratings in 2018, 5,000 Bond and Bank Loan Ratings in 2017, launch of India's first Android and iPhone app to disseminate rating, tamper-proof QR-code-enabled rating rationales, and SMERA Terminal to name a few.

Now is the time to re-emphasize our increasing footprint across all segments of ratings through the launch of our new name - 'Acuité'.

The name has changed. The spirit of upholding highest standards of analytical rigour, continuous improvement, excellence in our processes and quest for innovation remains the same. We would like to re-emphasize that we will continue to work hard to provide independent, unbiased and timely opinion of highest standard.

Acuité means 'sharpness and clarity of thought and vision'. Let our research and ratings help you take decisions with confidence.

Sankar Chakraborti