Japanese Credit Rating Agency (JCRA) has upgraded India’s sovereign rating to A- from BBB , citing the country’s solid economic growth, robust private consumption and public investment, along with improvements in the soundness of its financial system.
In an official statement on Wednesday, JCRA said the Indian economy has maintained a high growth rate of around 7 per cent, supported by strong private consumption and public investment.
It stated, “The government of India has steadily implemented policies conducive to productivity growth and economic development, including the development of digital public infrastructure and the implementation of the goods and services tax (GST), strengthening the country’s economic foundations as compared to the past”.
JCRA also pointed to the improvement in the banking sector, noting that the gross non-performing loan ratio declined to 1.8 per cent at the end of March 2026. The agency attributed the improvement to the establishment of the Insolvency and Bankruptcy Code (IBC), government capital injections and stronger supervision by the Reserve Bank of India (RBI).
The agency has upgraded the Republic of India’s Foreign Currency and Local Currency Long-term Issuer Ratings by one notch to A-. It has also raised India’s country ceiling by one notch to A.
JCRA noted that India has a population of more than 1.4 billion and a nominal GDP of USD 3.9 trillion. In FY2026, private consumption remained robust, supported by personal income tax cuts and reductions in GST rates, while the economy grew 7.7 per cent in real GDP terms.
The agency expects India to retain a high growth rate of over 6 per cent in FY2027.
It said inflation has been rising since the beginning of 2026 due to higher food prices caused by unfavourable weather conditions and higher energy prices amid escalating tensions in the Middle East. However, inflation has remained within the RBI’s target range.
On government finances, JCRA said India continues to face structural challenges that tend to keep fiscal deficits elevated, including complex intergovernmental fiscal relations, fiscal transfers aimed at reducing disparities among states and fiscal management that is susceptible to electoral cycles.
At the same time, it said the government has restrained the growth of current expenditures, including subsidies, while placing greater emphasis on capital expenditure, particularly infrastructure investment.
The agency said the quality of fiscal expenditure has improved as a result. In FY2026, the central government reduced its fiscal deficit from 4.7 per cent of GDP in the previous fiscal year to 4.4 per cent, while maintaining capital expenditure at a high level.
The central government debt-to-GDP ratio stood at 56.1 per cent at the end of FY2026 and is expected to decline gradually. However, JCRA said general government debt, including state government debt, and the associated interest burdens remain high.
JCRA said ample foreign exchange reserves, which significantly exceed short-term external debt, provide India with strong resilience against external shocks.
