Sovereign Credit Rating Upgrade: R&I Lifts India to BBB+
India Sovereign Credit Rating Upgrade Marks Third Upgrade in Five Months
In a landmark boost to the country’s economic credentials, Rating and Investment Information, Inc. (R&I) of Japan has upgraded India’s long-term sovereign credit rating to BBB+ from BBB with a ‘stable’ outlook. This marks India’s third sovereign credit rating upgrade this fiscal year, following similar reassessments by S&P Global in August and Morningstar DBRS in May.
The upgrade comes at a time when global markets are grappling with economic turbulence, trade tensions, and tariff wars—making the achievement even more significant for a major emerging economy like India.
Sovereign Credit: A Rare Streak of Upgrades
For nearly two decades, India’s sovereign debt hovered at the lowest investment grade of BBB- at S&P Global. With R&I’s move, India has now firmly stepped above that threshold. Earlier this year, Morningstar DBRS raised India’s rating to BBB from BBB (low), while S&P Global upgraded it from BBB- to BBB.
Economists and policymakers have long argued that India’s strong macroeconomic fundamentals, prudent fiscal management, and consistent growth warranted a better rating. The series of upgrades appears to vindicate that stance.
Why R&I Upgraded India
In its statement, R&I credited buoyant tax revenues, fiscal discipline, and resilient domestic demand for the upgrade. It praised the Indian government’s success in reducing the fiscal deficit without compromising public investment, alongside the country’s external resilience—supported by modest foreign debt, a manageable current account deficit, and steady inflows from services and remittances.
“Despite the uncertainties surrounding the global economic environment, India’s economy can be expected to maintain firm growth thanks to the economic structures driven by domestic demand and the policies of the administration of Narendra Modi,” R&I said.
The agency noted that the government debt ratio is likely to fall, the current account deficit remains low, and India’s net international investment position is steadily improving—all signaling stronger macroeconomic stability.
Sovereign Credit: Limited Financial Risk, Strong Growth Prospects
R&I emphasized that the risk related to India’s financial system is “limited” and projected that the economy will maintain growth in the mid-6% range from FY2026 onwards, supported by population growth, rising incomes, and sustained public investment.
The Reserve Bank of India has forecast 6.5% GDP growth for FY26, underpinned by strong consumption and government spending. Meanwhile, the central government is on course to narrow the fiscal deficit to 4.4% of GDP in FY26 from 4.8% in FY25, reinforcing its commitment to long-term fiscal consolidation.
R&I also noted that India’s external debt-to-GDP ratio is low, and foreign exchange reserves are ample to cover imports and short-term external debts, indicating minimal vulnerability on the external front.
Growing Global Confidence in India
Among major rating agencies, Moody’s maintains a Baa3 rating on India with a stable outlook, while Fitch Ratings keeps it at BBB-, both still at the lowest investment grade. The R&I decision, however, pushes India a notch higher.
Welcoming the move, the Ministry of Finance (India) said:
“The Government of India welcomes the decision by the Japanese credit rating agency, Rating and Investment Information, Inc. (R&I), to upgrade India’s long-term sovereign credit rating to ‘BBB+’ from ‘BBB’, while retaining the ‘Stable’ Outlook for the Indian economy.”
“Three credit rating upgrades for India in five months reflect increasing global recognition for India’s robust and resilient macroeconomic fundamentals and prudent fiscal management, and underscore global confidence in India’s medium-term growth prospects amid prevailing global uncertainties,” it added.
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