Fitch keeps India’s rating unchanged with negative outlook

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Fitch keeps India’s rating unchanged with negative outlook

New Delhi: Fitch Ratings has kept India’s sovereign rating at ‘BBB-‘ with a negative outlook while keeping it unchanged. In a statement issued on Tuesday, Fitch said that the risks associated with the medium-term growth outlook have been reduced due to the rapid pace of recovery from the epidemic and the easing of financial pressures. However, ‘BBB-‘ is the lowest rating in the investment category. This rating of the Indian economy reflects a balance between the medium-term growth outlook and external combative potential.

The rating agency said that through its strong foreign strong reserves, India is able to deal with some structural issues along with high public debt and weak financial sector. Fitch said, “We forecast that this fiscal year GDP growth will remain at a strong level of 8.7 percent. At the same time, in the year 2022-23, this rate can be 10 percent. This is bolstered by the combative ability of the Indian economy to rapidly recover from the COVID pandemic.

Apart from this, Fitch also projected India’s growth rate to be around seven percent during the year 2023-24 to 2025-26. The agency said that the government’s move forward on the reform agenda and ending the negative impact created by the epidemic will give momentum to the Indian economy. However, India’s negative outlook for 2021-22 reflects the uncertainty surrounding the medium-term debt path given limited fiscal space.

Fitch downgraded India’s economic outlook from stable to negative in June 2020. Fitch says movement indicators have returned to pre-Covid levels and high-frequency indicators point to strength in manufacturing. Last month, another rating agency Moody’s had upgraded India’s sovereign rating to ‘stable’ from ‘negative’.

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