Japan’s R&I Upgraded India’s Sovereign Rating to ‘BBB+: Retains Stable Outlook for the Economy

The Japanese credit rating agency, Rating and Investment Information, Inc. (R&I) has recently upgraded India’s long-term sovereign credit rating to ‘BBB+’ from ‘BBB’, while retaining the “Stable” Outlook for the Indian economy.

Third Sovereign Upgrade in 2025

This is the third such upgrade by a sovereign credit rating agency this year, following S&P’s upgrade to ‘BBB’ (from BBB-) in August 2025 and Morningstar DBRS’ upgrade to ‘BBB’ (from BBB (low)) in May 2025, reaffirming India’s position as one of the most dynamic and resilient major economies in the world.

R&I’s Rationale: Strong Growth & Fiscal Prudence

As per R&I’s India sovereign rating review published today, the ratings upgrade is supported by India’s position as one of the world’s largest and fastest-growing economies, underpinned by its demographic dividend, robust domestic demand, and sound government policies.

R&I in its report recognises the progress in fiscal consolidation by the Government, driven by buoyant tax revenues and rationalisation of subsidies, and manageable level of debt along with high growth. It also highlights India’s strengthened external stability, reflected in modest current account deficit, stable surpluses in services and remittances, low external debt-to-GDP ratio, and sufficient forex cover.

The agency further stated that the risks associated with the financial system remain limited. “The government is striving to reduce the central government fiscal deficit, which narrowed to 4.8% of GDP in FY2024. While the government has been increasing capital expenditures, it has managed to reduce the fiscal deficit thanks to the tax revenue increase backed by the strong domestic demand, as well as the cut of subsidies. In the government budget for FY2025, the government plans to constrain the fiscal deficit at 4.4%. In August 2025, the government announced the plan to simplify the GST to a two-tier structure and will implement it in September.

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Conclusion

The Government of India remains committed to building on this momentum through policies that promote inclusive, high-quality growth alongside fiscal prudence and macroeconomic stability.

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