Fitch affirms India rating at BBB- with stable outlook; revises growth numbers
Fitch Ratings Tuesday affirmed India’s rating at ‘BBB-‘ with a stable outlook, underpinned by strong domestic and external fundamentals.
“India's rating is underpinned by a robust medium-term GDP growth outlook and sound external finances, which remain intact as the country has effectively navigated a fraught external environment in the past few years,” the global rating agency noted.
The global rating agency also revised its growth forecast for the year upwards to 6.9% from the 6% projected earlier.
It pointed out that India will remain the fastest-growing economy in the next few years as economic momentum proves resilient, projecting 6.5% growth in the coming fiscal.
“Investment is likely to remain a key growth driver, as the government's capex drive is likely to continue, and private investment should accelerate gradually. Consumption is likely to moderate further in the near term due to reduced household savings buffers,” Fitch said.
The first official estimates released by the government earlier this month pegged the country’s growth at 7.3%, driven by a higher investment rate.
Fitch noted that the government’s infrastructure push, a strong private investment outlook and favourable dynamics will keep the country’s potential growth at 6.2%.
“The improved health of bank and corporate balance sheets should pave the way for a positive investment cycle.
Sustained reforms could support and boost growth prospects, but risks may arise from an uneven implementation record,” it said.
The rating agency was also cognisant of India’s falling core inflation, as it projected inflation to trend down to 4.7% by the end of 2024. Data released last week showed retail inflation rising marginally to 5.7% in December, even as
