The Japan Credit Rating Agency (JCR) on Wednesday has upgraded India’s sovereign credit rating by one notch to A- from BBB+, citing significant improvement in its assessment of the country’s creditworthiness after nearly two decades at the BBB+ level. It has maintained a stable outlook for India and upgraded both India’s foreign currency and local currency long-term issuer ratings, while also raising the country ceiling by one notch to A.
JCR cited India’s improving quality of government spending and a significant strengthening of the financial system as the driver of the upgrade. A key factor that led to the upgrade in the ratings was the improvement in banking sector asset quality. JCR emphasized that the asset quality of the banking sector has strengthened, supported by the establishment of the Insolvency and Bankruptcy Code, capital infusion by the Government and strengthened supervision by the RBI.
‘The banking sector’s gross nonperforming loan ratio declined to 1.8% at the end of March 2026, with its capital adequacy and profitability staying sound. Asset quality and capital adequacy have also improved in the non-banking financial sector,” said the agency.
JCR also lauded the government’s effort to scale up capital spending, particularly infrastructure investment, while restraining the growth of current expenditure including subsidies.
JCR noted that the Central Government’s fiscal deficit declined from 4.7% in FY25 to 4.4% in FY26, while capital expenditure remained high.
“In FY2026, private consumption remained robust, supported by personal income tax cuts and reductions of GST rates, with the economy growing 7.7% in real GDP terms. The economy is expected to retain a high growth rate of over 6% in FY2027,” stated the agency.
