Japanese Credit Rating Agency upgrades India’s sovereign rating to A- from BBB+

New Delhi: Japanese Credit Rating Agency (JCRA) has upgraded India’s sovereign rating to A- from BBB+, citing the country’s solid economic growth, effectiveness of its economic policies, robust private consumption and public investment, and improvements in the soundness of its financial system.

The economy is expected to retain a high growth rate of over 6% in FY27, it said Wednesday even as it highlighted that the general government debt, including those of states and the associated interest burdens remain high.

The upgrade came 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 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, strengthening the

country’s economic foundations as compared to the past, it said that the banking sector’s nonperforming loan ratio has 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 the Republic of India’s Foreign Currency and Local Currency Long-term Issuer Ratings by one notch to A-,” it said.

JCR has 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 the Middle East,” JCRA said, adding that the inflation rate has remained within the RBI’s target range.

As per the rating agency, the development of digital public infrastructure has expanded

access to financial services for a broad range of people and businesses, including low-income households and microenterprises.

Deficit, debt

While India continues to register a trade deficit amid its robust domestic demand, the current account deficit stays contained, supported by a surplus in the services balance. Its foreign exchange reserves are ample and significantly exceed its short-

term external debt, providing the country with strong resilience to external shocks, according to JCRA.

Elevated fiscal deficit is due to complex intergovernmental fiscal relations, fiscal transfer arrangements aimed at reducing disparities among states and fiscal management that is susceptible to electoral cycles but in recent years, the government has restrained growth in current expenditures.

“JCR will continue to monitor whether

government capital expenditure can induce private investment and reduce the economy’s dependence on government spending while sustaining economic growth,” it said.