New Delhi: The Japan Credit Rating Agency (JCR) on Wednesday upgraded India’s Foreign Currency and Local Currency Long-term Issuer Ratings by one notch from BBB+ to A- and also raised the country ceiling by one rank to A — citing India’s solid economic growth, the effectiveness of economic policies that strengthen the foundations for growth, and the improved soundness of the financial system.
“The Indian economy has maintained a high growth rate of around 7 per cent, supported by robust private consumption and public investment. 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 (GST), strengthening the country’s economic foundations as compared to the past,” the JCR report states.
It also highlights that the banking sector’s nonperforming loan ratio has declined to below 2 per cent, helped by the establishment of the Insolvency and Bankruptcy Code and the Reserve Bank of India’s (RBI) strengthened financial supervision and macroprudential policies.
The financial foundation of the non-banking financial sector has also strengthened, contributing to a significant improvement in the soundness of the financial system in recent years, it added.
According to the report, India has a population of more than 1.4 billion and nominal GDP of $3.9 trillion. In FY2026, private consumption remained robust, supported by personal income tax cuts and reductions of GST rates, with the economy growing 7.7 per cent in real GDP terms. The economy is expected to retain a high growth rate of over 6 per cent in FY27.
Inflation has been rising since the beginning of 2026, reflecting higher food prices caused by unfavourable weather conditions and higher energy prices amid escalating tensions in the Middle East. Nevertheless, the inflation rate has remained within the RBI’s target range.
JCR also stated that the quality of India’s fiscal expenditure has improved. In FY2026, the central government reduced its fiscal deficit from 4.7 per cent of GDP in the previous fiscal year to 4.4 per cent while maintaining capital expenditure at a high level. The central government debt-to-GDP ratio stood at 56.1 per cent at the end of FY26 and is expected to decline gradually.
However, the general government debt, including those of state governments, and the associated interest burdens remain high. 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, the report added.
(IANS)
