On Tuesday, Fitch Ratings confirmed India's sovereign grade with a stable outlook, citing the nation's strong economic prospects and stable external finances. According to a release, “Fitch Ratings has affirmed India's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB-' with a Stable Outlook,” emphasising that the country's promising economic outlook is a major component in the rating's endorsement.
According to Fitch Ratings, “India's rating reflects strengths from a robust growth outlook relative to peers and resilient external finances, which have supported India in navigating the significant external shocks over the past year.”
These are, however, counterbalanced by India's poor public finances, as seen by its large deficits and debt compared to peers, as well as by the country's lagging structural measures, such as the GDP per capita and governance indices from the World Bank.
Since August 2006, the agency has maintained India's credit rating at “BBB-,” the lowest investment grade rating.
India is expected to have one of the quickest rates of growth among rated sovereigns internationally in the current fiscal year, which ends in March 2024, according to Fitch Ratings.
However, the global rating agency warned that headwinds from high inflation, high interest rates, and weak global demand, together with dwindling pandemic-induced pent-up demand, would delay GDP from its initial forecast of 7% for FY23 before picking up to 6.7% by FY25.