Fitch Ups India Rating Outlook To Stable From Negative, Cuts GDP Growth Forecast To 7.8 Per Cent
The rating also balances India's external resilience from solid foreign-exchange reserve buffers against some lagging structural indicators
Fitch Ratings on Friday said it has revised the outlook on India’s sovereign rating to Stable from Negative as downside risks to medium-term growth have diminished on rapid economic recovery.
Fitch Ratings kept the rating unchanged at ‘BBB-’, according to the release.
“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,” it said.
It, however, cut the economic growth forecast to 7.8 per cent for the current fiscal (April 2022 to March 2023) from the 8.5 per cent prediction it made in March due to the inflationary impact of the global commodity price shock.
"High nominal growth in the gross domestic product (GDP) has facilitated a near-term reduction in the debt-to-GDP ratio. But public finances remain a credit weakness with the debt ratio broadly stabilising, based on our expectation of persistent large deficits", said Fitch.
The rating also balances India's external resilience from solid foreign-exchange reserve buffers against some lagging structural indicators, it added.
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 7.0 per cent between FY24 and FY27. This is underpinned by the government's infrastructure push, reform agenda and easing pressures in the financial sector,” it added.
Nevertheless, there are challenges to this forecast, given the uneven nature of the economic recovery and implementation risks for infrastructure spending and reforms, the release mentioned.
Trending News
Top Headlines
