The Japanese Credit Rating Agency (JCRA) has upgraded India’s sovereign credit rating to A- from BBB+, citing strong economic growth, robust private consumption, public investment and improvements in the country’s financial system.

In a statement on Wednesday, JCRA said the Indian economy has sustained a high growth rate of around 7 per cent, supported by strong domestic consumption and public investment. It expects India to maintain growth of more than 6 per cent in FY2027.

The agency said government policies aimed at boosting productivity and economic development have strengthened India’s economic foundations. It specifically highlighted the development of digital public infrastructure and the implementation of the Goods and Services Tax (GST).

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India’s economy grew 7.7 per cent in real terms in FY2026, while private consumption remained robust, helped by personal income tax cuts and reductions in GST rates. JCRA noted that India has a population of more than 1.4 billion and a nominal GDP of around $3.9 trillion.

Banking sector

JCRA also pointed to significant improvements in India’s banking sector. The gross non-performing loan ratio fell to 1.8 per cent at the end of March 2026, which the agency attributed to the implementation of the Insolvency and Bankruptcy Code (IBC), government capital injections and stronger supervision by the Reserve Bank of India (RBI).

The agency said these improvements have strengthened the soundness of India’s financial system and enhanced its resilience.

Inflation, debt concerns

JCRA said inflation has risen since the beginning of 2026, driven by higher food prices amid unfavourable weather conditions and increased energy prices due to escalating tensions in the Middle East. However, it noted that inflation remains within the RBI’s target range.

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The central government’s debt-to-GDP ratio stood at 56.1% at the end of FY2026 and is expected to decline gradually. However, JCRA cautioned that general government debt, including borrowing by state governments, and the resulting interest burden remain high.