Fitch Ratings: Global rating agency Fitch has maintained India’s rating at ‘BBB-‘ with stable outlook. Thus, India’s rating remains at the lowest investment level ‘BBB-‘. This is the lowest investment rating since August 2006.
What did the rating agency say
FIT Ratings said – The rating agency has maintained India’s long-term foreign currency issuer default rating (IDR) at ‘BBB-‘ with a stable outlook. According to the statement, India’s rating is supported by its strong mid-term growth outlook. This will be driven by India’s share of gross domestic product (GDP) in the global economy, its solid external finance position and the improvement in structural aspects of its debt profile.
Fiscal credibility improved
Fitch said that the recent achievement of government treasury or fiscal deficit targets, increased transparency and revenue growth have increased fiscal credibility. This has increased the possibility that India’s government debt may decline marginally in the mid-term. Despite this, fiscal data remains a weakness of India’s debt outlook. Deficit, debt and debt service burden are higher than other countries in the ‘BBB’ category. Governance indicators and decline in per capita GDP also affect the rating.
Estimates on GDP growth
“We forecast GDP growth of 7.2 per cent in FY2024-25 and 6.5 per cent in the next fiscal year, slightly lower than 8.2 per cent in FY2023-24,” Fitch Ratings said amid expectations that India will remain one of the fastest-growing countries globally.
The government’s goal
Let us tell you that in the budget for the financial year 2024-25, the government has reduced the fiscal deficit target of the Center to 4.9 percent of GDP for the year ending on March 31, 2025. The target was set at 5.1 percent in the interim budget of February. The government’s fiscal deficit target for the financial year 2024-25 is much lower than the rating agency’s estimate of 5.4 percent.
