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NEW DELHI: Global ratings agency Fitch on Tuesday affirmed India’s sovereign rating at BBB (minus) with a stable outlook. It said strengths from a robust growth outlook compared with peers and resilient external finances have supported India in navigating the large external shocks over the past year, but weak public finances remain an obstacle.
“We forecast India to be one of the fastest-growing Fitch-rated sovereigns globally at 6% in the fiscal year ending March 2024 (FY24), supported by resilient investment prospects. Still, headwinds from elevated inflation, high interest rates and subdued global demand, along with fading pandemic induced pent-up demand, will slow growth from our FY23 estimate of 7% before rebounding to 6. 7% by FY25,” Fitch Ratings said.
Other ratings agencies such as S&P and Moody’s also have the lowest investment grade rating for India with a stable outlook. The action by ratings agencies will help add to positive sentiment and reduce cost of borrowings by firms. Fitch said a strong growth potential is a key supporting factor for the sovereign rating.
“Growth prospects have brightened as the private sector appears poised for stronger investment growth following the improvement of corporate and bank balance sheets in the past few years, supported by the government’s infrastructure drive. Still, risks remain given low labour force participation rates and an uneven reform implementation record,” said the agency.
It said that India’s large domestic market makes it an attractive destination for foreign firms.
“We forecast India to be one of the fastest-growing Fitch-rated sovereigns globally at 6% in the fiscal year ending March 2024 (FY24), supported by resilient investment prospects. Still, headwinds from elevated inflation, high interest rates and subdued global demand, along with fading pandemic induced pent-up demand, will slow growth from our FY23 estimate of 7% before rebounding to 6. 7% by FY25,” Fitch Ratings said.
Other ratings agencies such as S&P and Moody’s also have the lowest investment grade rating for India with a stable outlook. The action by ratings agencies will help add to positive sentiment and reduce cost of borrowings by firms. Fitch said a strong growth potential is a key supporting factor for the sovereign rating.
“Growth prospects have brightened as the private sector appears poised for stronger investment growth following the improvement of corporate and bank balance sheets in the past few years, supported by the government’s infrastructure drive. Still, risks remain given low labour force participation rates and an uneven reform implementation record,” said the agency.
It said that India’s large domestic market makes it an attractive destination for foreign firms.
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