After 35 years, Japan's JCRA upgrades India sovereign rating to A- from BBB+

New Delhi: Japan Credit Rating Agency (JCRA) has upgraded India's sovereign rating to A- from BBB+, a feat achieved after more than three decades, citing the country's solid economic growth, effectiveness of its economic policies, robust private consumption and public investment, and improved soundness of its financial system.

India's economy is expected to retain a high growth rate of more than 6% in 2026-27, JCRA said on Wednesday, even as it highlighted that the general government debt, including those of states, and the associated interest burdens remain high.

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The upgrade came close on the heels of official data showing that India's economy grew a better-than-expected 7.8% in the June quarter from a year earlier, belying concerns that severe headwinds, including the war in West Asia, may have dented growth.

Noting that the government of India "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, strengthening the country's economic foundations, the agency said the banking sector's non-performing loan ratio had declined to below 2%.

"Considering India's solid economic growth, the effectiveness of economic policies that strengthen the foundations for growth, and the improved soundness of the financial system, JCR has upgraded India's Foreign Currency and Local Currency Long-term Issuer Ratings by one notch to A-," it said.

The finance ministry said the upgrade underscores the continued strengthening of India's economic fundamentals, especially against the backdrop of a challenging global environment. "The upgrade comes against the backdrop of a challenging global environment and underscores the continued strengthening of India's economic fundamentals, supported by sustained growth, effective economic policies, improved fiscal quality and a stronger financial system," it said.

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India had previously received sovereign rating upgrades from major international ratings agencies over the past year. Morningstar DBRS upgraded India's sovereign rating in May 2025, followed by S&P Global Ratings in August 2025 and Rating and Investment Information, Inc. (R&I), Japan, in September 2025.

"The 'A' is back after 35+ years. JCRA has upgraded India to 'A-'. Recognition of India's growth momentum, macro stability, deep structural reforms, and the strength of Centre-State partnership. The last 'A' was Moody's A2 rating given in 1988, which India lost in the 1990-91 BoP crisis," said NK Singh, chairman, 15th Finance Commission in a social media post.

The ratings agency also raised the country ceiling by one notch to A.

"The economy is expected to retain a high growth rate of over 6% in FY27. Inflation has been rising since the beginning of 2026, reflecting higher food prices caused by unfavorable weather conditions and higher energy prices amid escalating tensions in West Asia," JCRA said.