- Japan's JCR has upgraded India's sovereign rating to A- from BBB+.
- The upgrade was driven by improving quality of government spending and a significant strengthening of the financial system.
- A key factor was the improvement in banking sector asset quality, supported by the Insolvency and Bankruptcy Code, capital infusion by the Government, and strengthened supervision by the RBI.
- JCR lauded the government’s effort to scale up capital spending, particularly infrastructure investment, while restraining the growth of current expenditure including subsidies.
The Japan Credit Rating Agency (JCR) has upgraded India's sovereign credit rating to A- from BBB+, marking a significant shift after nearly two decades. This upgrade reflects a stronger assessment of India's creditworthiness, driven by improvements in the banking sector and fiscal management.1
JCR maintained a stable outlook for India, upgrading both foreign and local currency long-term issuer ratings, and raising the country ceiling to A. The agency highlighted the strengthening of the banking sector's asset quality, supported by the Insolvency and Bankruptcy Code, government capital infusion, and enhanced supervision by the Reserve Bank of India (RBI).34
The banking sector's gross nonperforming loan ratio has improved to 1.8% as of March 2026, with sound capital adequacy and profitability. Additionally, the non-banking financial sector has also seen improvements in asset quality and capital adequacy.
JCR commended the government's efforts to increase capital spending, particularly in infrastructure, while controlling current expenditure growth, including subsidies. The Central Government's fiscal deficit decreased from 4.7% in FY25 to 4.4% in FY26, with high capital expenditure levels.
The agency noted that in FY2026, private consumption remained strong, aided by personal income tax cuts and reduced GST rates, contributing to a 7.7% real GDP growth. The economy is projected to maintain a growth rate exceeding 6% in FY2027.
“The upgrade reflects JCR's recognition of India's improving banking asset quality, supported by the Insolvency and Bankruptcy Code, government capital infusion, and RBI supervision. JCR also lauded the government's focus on infrastructure investment while restraining current expenditure, including subsidies.”
