JCRA upgrades India’s sovereign rating to A- on strong growth
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Japanese Credit Rating Agency (JCRA) has upgraded India’s sovereign rating by one notch to A- from BBB+, citing strong economic growth, robust private consumption and public investment, and improvements in the financial system.
In a statement on Wednesday, JCRA said India has maintained economic growth of around 7 per cent, supported by private consumption and public investment. It also credited government measures such as digital public infrastructure and the implementation of the Goods and Services Tax with strengthening the economy.
JCRA said conditions in the banking sector have improved, with the gross non-performing loan ratio falling to 1.8 per cent at the end of March 2026. It attributed the improvement to the Insolvency and Bankruptcy Code, government capital injections and stronger supervision by the Reserve Bank of India.
The agency also raised India’s country ceiling by one notch to A. India has a population of more than 1.4 billion and a nominal GDP of $3.9 trillion.
The economy grew 7.7 per cent in real terms in FY2026, with private consumption supported by personal income tax cuts and reductions in GST rates. JCRA expects growth to remain above 6 per cent in FY2027.
The agency noted that inflation has risen since the beginning of 2026 due to higher food and energy prices, but has remained within the RBI’s target range.
On public finances, JCRA said India continues to face structural challenges that keep fiscal deficits elevated. However, it noted that the government has restrained current expenditure, including subsidies, while prioritising capital spending, particularly infrastructure.
The central government’s fiscal deficit declined to 4.4 per cent of GDP in FY2026 from 4.7 per cent the previous year, while capital expenditure remained high. Central government debt stood at 56.1 per cent of GDP and is expected to decline gradually.
JCRA said high general government debt and interest burdens remain concerns, but India’s ample foreign exchange reserves, which significantly exceed short-term external debt, provide resilience against external shocks.