Japan Credit Rating Agency Upgrades India’s Sovereign Rating To A- From BBB+

New Delhi: Japan Credit Rating Agency (JCRA) has upgraded India’s sovereign rating by one notch to A- from BBB+, citing strong economic growth, resilient consumption, public investment and an improving financial system.

The agency upgraded India’s foreign and local currency long-term issuer ratings to A-. The country ceiling was also raised by one notch to A.

Strong Growth Supports Upgrade

JCRA said India has maintained economic growth of around 7%, supported by private consumption and public investment. It expects the economy to continue expanding by more than 6% in FY2027.

India, with a population exceeding 1.4 billion and nominal GDP of $3.9 trillion, recorded real GDP growth of 7.7% in FY2026.

The agency said reforms including digital public infrastructure and the Goods and Services Tax have strengthened India’s economic foundations and supported productivity.

India’s banking system has also improved significantly, with the gross non-performing loan ratio falling to 1.8% at the end of March 2026. JCRA attributed the improvement to the Insolvency and Bankruptcy Code, government capital injections and stronger RBI supervision.

Fiscal Challenges Remain

JCRA said the Centre reduced its fiscal deficit to 4.4% of GDP in FY2026 from 4.7% a year earlier while maintaining high infrastructure spending.

Central government debt stood at 56.1% of GDP at the end of FY2026 and is expected to decline gradually.

However, elevated general government debt and interest costs remain key challenges.

The agency added that India’s sizeable foreign exchange reserves, which comfortably exceed short-term external debt, provide a strong buffer against external economic shocks.