Sovereign Credit Ratings: Why India’s Upgrades Matter

On 2 September 2026, the Japan Credit Rating Agency (JCR) raised India’s rating by one step. It moved from BBB+ to A- (The Hindu).

• The upgrade covers India’s long-term ratings in both foreign and local currency.
• JCR is a Japanese agency. It was set up in 1985.
• One step on a rating scale is called a notch.

Why did JCR upgrade India?

• Fast growth, at around 7% a year.
• Strong digital public infrastructure, like UPI and Aadhaar.
• Reforms such as GST.
• Cleaner banks. Bad loans (NPAs) are now below 2%.
• The Insolvency and Bankruptcy Code and RBI checks helped clean the banks.

A credit rating is like a report card for a borrower. It tells lenders how safe their money is. The grade comes from a credit rating agency, or CRA.

• CRAs rate governments, companies and bonds.
• A bond is a loan that investors give to a borrower. The borrower pays interest on it.
• When the borrower is a national government, the grade is a sovereign rating.
• CRAs do not rate ordinary people.
• Your personal loan record is tracked by a credit bureau, such as TransUnion CIBIL.

The Big Three

• Three global agencies lead the field: S&P, Moody’s and Fitch.
• Together they hold about 95% of the market.
• S&P and Fitch use letters like BBB-. Moody’s uses its own style, like Baa3.

Ratings are a ladder of letters. AAA sits at the top. D, for default, sits at the bottom. Plus and minus signs split each step finer.

The most important line

• Ratings of BBB- or higher are called investment grade.
• At Moody’s, the same line is Baa3.
• Ratings below it are called high-yield, or “junk”.
• Many big funds are only allowed to buy investment-grade bonds.
• So crossing this line opens the door to a lot more money.

Each agency rates India on its own. So India holds different grades from different agencies. Here is the picture in 2026.

The S&P upgrade was a big moment

• S&P raised India on 14 August 2025.
• It was S&P’s first upgrade of India in 18 years.
• Its last one, in 2007, had lifted India into investment grade.
• Morningstar DBRS also upgraded India, in May 2025.

Not everyone has moved

• Fitch kept India at BBB-, with a stable outlook.
• It pointed to India’s high government debt and deficits.
• Moody’s still has India at Baa3, its lowest investment grade.

Why should anyone care about a few letters? Because ratings change the price of borrowing.

• A higher rating tells lenders the risk is lower.
• So they accept a lower interest rate.
• The government then pays less interest on its loans.
• That leaves more money for roads, schools and health.
• Indian companies that borrow abroad often gain too. Their costs tend to follow the country’s rating.
• A downgrade works the other way. Borrowing gets costlier, and some investors may pull money out.

India has its own rating agencies too. They mostly rate Indian companies and their bonds.

• CRISIL was set up in 1987. It was India’s first CRA. ICICI and UTI promoted it. Today it is part of S&P Global.
• ICRA began in 1991. Moody’s now owns a majority stake in it.
• CARE Ratings, now called CareEdge, is another major agency.
• Smaller ones include Brickwork Ratings.

Who is the referee?

• CRAs in India are regulated by SEBI, not the RBI.
• The rules are the SEBI (Credit Rating Agencies) Regulations, 1999 (SEBI).