Fitch Ratings, one of the leading credit rating agencies, has affirmed India’s sovereign rating at ‘BBB-‘ with a stable outlook. The rating reflects India’s relatively low government debt, strong external finances, and a diversified economy. The stable outlook reflects Fitch’s expectation that India’s economic recovery will continue to gain momentum in the coming months, supported by strong policy measures and structural reforms.
Fitch’s affirmation of India’s sovereign rating comes at a time when the country is grappling with the impact of the COVID-19 pandemic on its economy. The pandemic has disrupted economic activity and led to a sharp contraction in GDP in 2020. However, Fitch expects India’s economy to grow by 12.8% in 2021-22, following a contraction of 7.5% in the previous fiscal year.
Fitch’s affirmation of India’s sovereign rating reflects the agency’s confidence in the country’s economic prospects, despite the challenges posed by the pandemic. The rating agency expects India’s growth to be driven by a recovery in domestic demand, supported by policy measures and structural reforms.
Fitch also noted that India’s fiscal policy has been supportive of the economy, with the government implementing several measures to boost growth and provide relief to businesses and individuals affected by the pandemic. The rating agency expects India’s fiscal deficit to narrow to 6.5% of GDP in the current fiscal year, from 9.5% in the previous year, reflecting the government’s commitment to fiscal consolidation.
Overall, Fitch’s affirmation of India’s sovereign rating is a positive development for the country and reflects the agency’s confidence in India’s economic prospects. The rating reflects India’s strong external finances, low government debt, and a diversified economy, as well as the government’s commitment to policy measures and structural reforms. The stable outlook reflects Fitch’s expectation that India’s economic recovery will continue to gain momentum in the coming months, driven by a recovery in domestic demand and policy support.
