Fitch Ratings has revised India’s long term foreign currency issuer default rating (IDR) to stable from negative while retaining the ‘BBB-‘ rating.
“The outlook revision reflects our view that downside risks to medium-term growth have diminished due to India’s rapid economic recovery and easing financial sector weaknesses, despite near-term headwinds from the global commodity price shock. We expect robust growth relative to peers to support credit metrics in line with the current rating,” the agency said while explaining the rationale behind the outlook.
Fitch forecasts India’s GDP growth to remain robust at 7.8 per cent in the current fiscal. At the same time though, it is a downward revision from its earlier forecast of 8.5 per cent, which the agency had given in March, due to global commodity prices rising.
Fitch further said that India’s strong medium-term growth outlook relative to peers is a key supporting factor for the rating and will sustain a gradual improvement in credit metrics.
“We forecast growth of around 7 per cent between 2023-24 and 2026-27, underpinned by the Government’s infrastructure push, reform agenda and easing pressures in the financial sector. Nevertheless, there are challenges to this forecast, given the uneven nature of the economic recovery and implementation risks for infrastructure spending and reforms,” the agency said further.
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