Japan’s credit rating agency JCR on Wednesday raised India’s rating by one notch to A- with stable outlook. The agency raised the rating on the basis of India’s strong economic growth and improving financial condition. India has achieved A- rating after a gap of thirty-five years. JCR’s A rating indicates a high level of certainty of meeting financial obligations.
The Japanese Credit Rating Agency (JCR) announced raising India’s rating from BBB+ to A-, just days after the National Statistics Office (NSO) released better-than-expected GDP data. According to the data, India’s economic growth rate in the first quarter stood at 7.8 percent due to the strong performance of the manufacturing and service sectors despite the global adverse conditions arising from the West Asia crisis.
History created after 35 years
The agency said that in view of India’s solid economic growth, efficiency of economic policies strengthening the foundation of growth and strength of the financial system, India’s long-term issuer rating in foreign currency and local currency has been raised by one notch to A-. The Finance Ministry said the JCR rating upgrade reflects India’s strong economic growth, improving fiscal quality, strong financial system and solid external position. Chairman of the 15th Finance Commission N. Of. Singh wrote on social media platform Singh said that A rating has returned after more than 35 years. He said that Moody’s last gave A2 rating to India in 1988. India’s rating was downgraded during the balance of payments crisis of 1990–91.
Recently many agencies increased their credibility
Last year, major international rating agencies have enhanced India’s reputation. Morningstar DBRS had upgraded India’s rating in May last year. Whereas S&P Global Ratings raised India’s rating in August 2025 and Japan’s Rating and Investment Information Inc. (R&I) raised India’s rating in September 2025. JCR said the fiscal deficit of the central government declined from 4.7 percent in FY 2024-25 to 4.4 percent in FY 2025-26, while capital expenditure remained high. The Finance Ministry said that this rating increase has happened amidst a challenging global environment and it reflects the continued strengthening of India’s economic fundamentals. This has been supported by sustained economic growth, effective economic policies, improving fiscal quality and a strong financial system.
Growth was better than expected
JCR said that the Indian economy has maintained a high growth rate of about seven percent, supported by strong private consumption and public investment. The economic growth of 7.8 percent recorded in the first quarter was more than the RBI’s estimate of seven percent GDP growth. JCR said that the Indian economy, with a population of more than 140 crore and a GDP (gross domestic product) of $ 3.9 trillion at current prices, is expected to maintain a high growth rate of more than six percent in the current financial year. India’s economic growth rate last financial year was 7.8 percent. The agency said that the Government of India has continuously implemented policies conducive to productivity growth and economic development. These include the development of digital public infrastructure and implementation of the Goods and Services Tax (GST). Due to this the economic foundation of the country has become stronger than before.
No changes made in S&P and Fitch ratings
JCR also noted the strength of India’s financial system. It said the asset quality of banks has improved due to the implementation of the Insolvency and Bankruptcy Code, capital infusion by the government and strong monitoring by the RBI. Last month, two global rating agencies S&P and Fitch also maintained India’s investment-grade rating. He cited India’s dynamic and fast-growing economy, stability on the policy front and high investment in infrastructure as its basis. However, JCR also mentioned some structural challenges facing India. These include high fiscal deficit, fiscal transfer mechanisms to reduce disparities between states, and sensitivity of fiscal management to elections.
How did the economy grow?
The agency said that in recent years the government has controlled the growth of current expenditure, including subsidies, and given greater priority to capital expenditure, including investment in infrastructure. This has improved the quality of fiscal expenditure. Finance Minister Nirmala Sitharaman had announced for the first time in the budget of 2024-25 (April-March) that from the financial year 2026-27, the government will try to keep the fiscal deficit every year in such a way that the central government debt as a percentage of GDP keeps decreasing. Under this, the government has estimated the debt-GDP ratio to be 55.6 percent in the budget for the financial year 2026-27, which is less than 56.1 percent in the financial year 2025-26. The government aims to bring this ratio to 50 percent by March 2031.
Fiscal deficit estimate
The Center has estimated the fiscal GDP for the financial year 2026-27 to be 4.3 percent, i.e. Rs 16.96 lakh crore. However, based on the revision of GDP at current market prices in the new GDP series, this target comes to 4.5 percent. The Center has set a gross market borrowing target of Rs 16.09 lakh crore and a net borrowing target of Rs 11.73 lakh crore for the financial year 2026-27. According to the JCR, the Centre’s debt-to-GDP ratio stood at 56.1 percent at the end of FY 2025-26 and is expected to decline gradually. However, the general government debt and interest burden, including that of the states, is still high.
Cad is under control
On the external sector front, JCR said India’s current account deficit (CAD) is under control and is being supported by the surplus in services trade. Foreign exchange reserves are adequate and significantly exceed short-term external debt, making India strong against external shocks. It is noteworthy that India’s current account deficit increased to $ 4.2 billion i.e. 0.5 percent of GDP in the June quarter, which was $ 3.4 billion a year ago. At the same time, in the week ending August 21, India’s foreign exchange reserves reached a record $ 729.33 billion.
