Page 36 - Policy Economic Report - September 2026

POLICY AND ECONOMIC
OIL & GAS MARKET

global headwinds. The agency also highlighted the Government’s continued implementation of policies
conducive to productivity growth and economic development, including the development of digital public
infrastructure and implementation of the Goods and Services Tax, which have strengthened India’s
economic foundations.

The agency also recognised the improvement in the quality of fiscal expenditure, with greater emphasis
on capital expenditure, particularly infrastructure investment. JCR noted that the Central Government’s
fiscal deficit declined from 4.7% in FY25 to 4.4% in FY26, while capital expenditure remained high.

JCR also highlighted the significant improvement in the overall soundness of India’s financial system. The
asset quality of the banking sector has strengthened, supported by the establishment of the Insolvency
and Bankruptcy Code, capital infusion by the Government and strengthened supervision by the RBI.
Capital adequacy and profitability in the banking sector have remained sound. The asset quality and
capital adequacy of the non-banking financial sector have also improved, further strengthening the
financial system.

On the external sector, the agency noted that India’s current account deficit remains contained,
supported by a surplus in the services balance. Ample foreign exchange reserves, significantly exceeding
short-term external debt, provide strong resilience against external shocks.

The upgrade comes against the backdrop of a challenging global environment and underscores the
continued strengthening of India’s economic fundamentals, supported by sustained growth, effective
economic policies, improved fiscal quality and a stronger financial system.

It is worth noting that India had previously received sovereign rating upgrades from major international
rating agencies over the past year. Morningstar DBRS upgraded India’s sovereign rating in May 2025,
followed by S&P Global Ratings in August 2025 and Rating and Investment Information, Inc. (R&I), Japan,
in September 2025.

7. India’s Energy Transition to Drive Over Rs. 4 Lakh Crore Investment in Energy Storage by FY32

India’s accelerating transition towards renewable energy is expected to create a substantial requirement
for energy storage, with more than ?4 lakh crore of investment estimated to be needed by FY2031–32 to
meet the country’s projected storage requirements, according to a recent report by CareEdge Ratings.
The report highlights that India’s power sector is increasingly shifting from the challenge of adding
generation capacity to the more complex task of integrating variable renewable energy into the electricity
grid.

The scale of the requirement is significant. India’s operational energy storage capacity stood at around 54
GWh as of June 2026, while the requirement is projected to increase to approximately 411 GWh by
FY2031–32. The growing gap reflects the rapid expansion of renewable generation and the need to
balance variations in solar and wind power availability. While non-fossil sources account for around 50
per cent of India's installed power generation capacity, they currently contribute approximately 29 per

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