India’s Sovereign Rating Upgraded to A- from BBB+

NEW DELHI: The Japanese Credit Rating Agency has upgraded India’s sovereign rating to A- from BBB+, citing strong economic growth, robust private consumption, sustained public investment and improvements in the country’s financial system. The agency also raised India’s country ceiling by one notch to A.

In an official statement on Wednesday, the agency said India’s economy had continued to expand at around 7 per cent, with private consumption and public investment providing key support. “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 stated.

The agency pointed to reforms including the GST, the Insolvency and Bankruptcy Code (IBC) and the expansion of digital public infrastructure as factors strengthening India’s economic foundations. JCR also cited a marked improvement in the banking sector. The gross non-performing loan ratio had fallen to 1.8 per cent by the end of March 2026, it said, attributing the improvement to the IBC, government capital support and tighter supervision by the Reserve Bank of India (RBI).

India’s foreign currency and local currency long-term issuer ratings were both raised to A-. The agency said private consumption remained strong during FY2026, aided by personal income tax cuts and lower GST rates. India’s real GDP grew 7.7 per cent during the year, JCR said, adding that growth was expected to remain above 6 per cent in FY2027.

While inflation has risen since the start of 2026 because of higher food and energy prices, JCR said it remained within the RBI’s target range. The agency flagged persistent fiscal challenges, including high government debt and structural factors that could keep deficits elevated. However, it noted that the Centre had shifted expenditure towards infrastructure and capital spending while restraining current expenditure. The central government’s fiscal deficit fell to 4.4 per cent of GDP in FY2026 from 4.7 per cent a year earlier, while its debt-to-GDP ratio stood at 56.1 per cent. JCR said India’s large foreign exchange reserves also offered protection against external shocks, though sustaining growth alongside fiscal consolidation will remain central to the country’s credit outlook.