Why in news?
India's sovereign credit rating was upgraded to BBB+ with a Stable outlook by the Japanese credit rating agency Rating and Investment Information (R&I) in September 2025. 
 
Sovereign credit ratings of some other major countries in 2025

• Germany, Canada, Australia, Netherlands, Singapore, and Switzerland hold AAA ratings.
• United States and some European countries have AA or AA+ ratings.
• Countries like China and Japan have A+ ratings.

Reasons for the Upgrade:

• Strong macroeconomic fundamentals characterized by India's position as one of the fastest-growing major economies with resilient domestic demand and a large, young population supporting growth.
• Sustained fiscal consolidation efforts that improved government finances, with combined central and state debt declining to about 80% of GDP.
• Robust revenue collections and rationalization of subsidies leading to a manageable deficit and enhanced fiscal discipline.
• External stability reflected in a contained current account deficit below 1% of GDP, healthy foreign exchange reserves, and low external debt ratios.
• Credit rating agencies recognized India's reduced risk profile and improved ability to service its debt under both domestic and global economic uncertainties.

Impact of the Upgrade:

• Enhanced investor confidence attracting higher foreign direct investment (FDI) and foreign portfolio investment (FPI), stimulated by lower sovereign risk perception.
• Reduced sovereign borrowing costs, which helps in cheaper government debt issuances and reduces financing costs for businesses.
• Strengthened India’s economic credibility internationally, reinforcing its attractiveness as a stable and promising investment destination.
• Support for sustainable economic growth and infrastructure funding through improved access to global financial markets.

Overall, the upgrade aligns with India's long-term goals of economic expansion, job creation, and fiscal prudence, while providing a competitive edge globally.

Download Pdf