India's creditworthiness has been enhanced by Japan's Rating & Investment Information, moving it to a BBB+ rating.
India has received a significant boost to its global standing as Japan's Rating and Investment Information, Inc. (R&I) has upgraded the country's long-term sovereign credit rating from 'BBB' to 'BBB+'. This upgrade, the third of its kind in 2025, underscores global confidence in India's medium-term growth prospects amid prevailing global uncertainties.
The Outlook for India's sovereign credit rating remains Stable, according to R&I. The upgrade is backed by India's strong demographic dividend, robust domestic demand, and prudent government policies. The government, under the leadership of Prime Minister Narendra Modi, has been praised for its efforts to attract foreign manufacturers, infrastructure development, strengthening of legal and institutional frameworks for business, reduced dependence on energy imports, and ensuring economic security.
R&I has acknowledged that while the rationalisation of the Goods & Services Tax (GST) may lead to revenue losses, these losses may be partly offset by stimulated private consumption. The government has made progress in reducing the fiscal deficit at a moderate pace, driven by buoyant tax revenues, rationalised subsidies, high growth rates, and a manageable level of debt.
External stability in India is strengthened by a modest current account deficit, stable surpluses in services and remittances, a low external debt-to-GDP ratio, and sufficient foreign exchange cover. Risks in the financial system are limited in India. However, R&I has acknowledged risk factors such as recent increases in U.S. tariffs.
India's low reliance on U.S. exports and its domestic demand-driven growth model are expected to mitigate the impacts of these tariffs. The government remains committed to building on this momentum through policies promoting inclusive, high-quality growth alongside fiscal prudence and macroeconomic stability.
The administration led by Prime Minister Narendra Modi is pushing ahead with economic policies aimed at attracting global entry, developing infrastructures, institutionalizing the legal framework to improve the business environment, reducing the reliance on energy imports, and ensuring economic security. These efforts focus on boosting domestic production capacity and integrating India into global supply chains.
The government's initiatives, such as "Make in India," enhancing infrastructure, easing regulatory frameworks, and providing incentives for investment and manufacturing growth, have been instrumental in this upgrade. The upgrade reflects India's status as one of the world's largest and fastest-growing economies.
The Government of India has welcomed the upgrade as an affirmation of India's resilient macroeconomic fundamentals and prudent fiscal management. The upgrade serves as a testament to the effective policies implemented by the government and its commitment to fostering a conducive environment for economic growth and development.
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